World gold prices cool down after signals from the US

World gold prices fell 1.8% last week after newly released inflation data reduced the possibility of the US Federal Reserve (Fed) cutting interest rates, while the market turned its attention to negotiations between US President Donald Trump and his Russian counterpart Vladimir Putin.

Gold jewelry is displayed for sale at a jewelry store in Istanbul, Türkiye.

Data released on August 14 showed that US producer prices (PPI) rose the most in three years in July 2025. Traders see an 89.1% chance of the Fed cutting interest rates by 25 basis points in September, down from around 95% before the data was released. Non-yielding gold prices fell after the data was released, with spot gold closing down 0.6%. Gold prices typically rise in a lower interest rate environment, as lower rates reduce the opportunity cost of holding the metal.

The fall in gold prices due to the stronger-than-expected PPI data will also help push the Fed’s preferred inflation gauge, the core personal consumption expenditure index, higher in July 2025, potentially making the Fed cautious about rate cuts, said Ole Hansen, head of commodity strategy at Saxo Bank.

US Treasury Secretary Scott Bessent on August 13 made his strongest call yet for the Fed to embark on a cycle of deep interest rate cuts, with a total reduction of at least 1.50 percentage points from current levels. He said the move should begin as early as September 2025, with a half-point rate cut.

The rate cut that Mr. Bessent proposed was much higher than the market expected. A 1.50 percentage point cut would take the Fed's policy rate to about 2.88%, while the market forecasts interest rates at 3% in September or October next year.

Meanwhile, more than 50% of US industries reported job cuts in July 2025, a worrying development and a sign of economic recessions throughout history.

The US jobs report for July painted a worrying picture: the economy added just 73,000 jobs, far below expectations. More alarmingly, the May and June jobs figures were revised down by a combined 258,000, suggesting that the strength of the labor market had been overestimated. The unemployment rate rose to 4.2%, while the labor force participation rate fell for the third straight month to 62.2%.

According to Fortune, health care is the only major industry that is still adding jobs — a notable warning sign. Mark Zandi, chief economist at market data firm Moody's Analytics, described it as a "significant" warning sign that often appears in the early stages of recessions.

Signs of strain are also evident in unemployment claims data. Nearly two million Americans are now receiving unemployment benefits — the highest number since late 2021 — suggesting more job seekers are having trouble finding new work.

JPMorgan notes that a drop in demand on this scale is a recession warning sign. Companies typically maintain hiring during what they perceive as a temporary slowdown in economic growth. But when demand falls alongside a slowdown in growth, this often signals a major layoff.

Meanwhile, Mr Trump traveled to Alaska for a summit on August 15 with Mr Putin to discuss a ceasefire deal for Ukraine.

After meeting with President Trump, President Putin noted positive developments in trade and expressed confidence in the huge potential of bilateral partnership in the fields of trade, energy, digital technology , space and the Arctic, calling for "turning a new page" and returning to cooperation.

For his part, US President Donald Trump confirmed reaching many agreements with Mr. Putin and said that "first and foremost, perhaps we have a very good chance of reaching a peaceful solution" even though a peaceful solution cannot be declared.

Political scientist Pavel Danilin believes that the Alaska meeting was quite effective, but its effectiveness was different from the expectations of most observers. According to him, the volume of problems accumulated in Russia-US relations is very large. And the effectiveness of the meeting is the agreements reached on some of these issues, information about which will be made public in the coming days.

The head of the Russian Direct Investment Fund, an important member of the Russian negotiating delegation, Kirill Dmitriev, assessed that "the dialogue was very positive and constructive... many issues were resolved. Some issues still need to be resolved."

Analysts at ANZ Bank said that macroeconomic and geopolitical risks will increase in the second half of the year, increasing the appeal of gold as a safe haven. Geopolitical uncertainty and low interest rates generally boost demand for gold.

Spot gold prices were almost unchanged at $3,336.66 an ounce on August 15. Earlier, gold prices fell on August 14 as higher-than-expected inflation data and lower jobless claims in the US lowered the likelihood of a sharp rate cut by the Fed in September 2025, pushing up the dollar and government bond yields. Spot gold prices fell 0.5% to $3,337.21 an ounce, while gold futures for December 2025 delivery closed down 0.7% to $3,383.2 an ounce.

Gold prices also fell in the first trading session of the week on August 11, after the US President announced that he would not impose import tax on gold bullion, as investors awaited the US inflation report, which could reveal the Fed's interest rate orientation. Gold prices for December 2025 delivery fell 2.5%, closing at $3,404.70/ounce. Meanwhile, spot gold prices fell 1.2%, to $3,358.33/ounce.

Gold prices then rose slightly on August 12 after US inflation data raised the possibility of a Fed rate cut. Gold prices also rose on August 13 as the US dollar weakened and US government bond yields fell.

If gold breaks through recent resistance around $3,400 an ounce, the upside momentum could come more from geopolitical developments than economic data, said Fawad Razaqzada, a market analyst at financial services firm City Index and FOREX.com.

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