02:00 PM EDT, 08/13/2024 (MT Newswires) -- Updates prices.)

Gold traded at a record high mid-afternoon on Tuesday as the dollar and treasury yields weakened after a U.S. inflation measure rose less than expected last month.

Gold for December delivery was last seen up US$2.70 to US$2,506.70 per ounce, above the record US$2,505.40 set on July 18.

The U.S. Bureau of Labor Statistics reported the July Producer Price Index (PPI) rose 0.1% from June, under expectations for a 0.2% monthly rise, according to Marketwatch. Core PPI, excluding volatile items, was flat from the prior month, while the consensus estimate expected a 0.2% monthly rise.

The data further raises expectations the Federal Reserve will begin cutting interest rates from a current 23-year high at the September meeting of its policy committee as inflation slows nearer to its 2% target. However Wednesday's release of the July Consumer Price Index will be closely watched. The index is expected to show inflation running at a 3% annualized rate.

"Our view is that we are approaching the start of the Fed's rate-cutting cycle. The market is pricing 100bp of cuts in 2024, starting in September. We, however, expect 50bp of rate cuts in 2024 and a total of 200bp of cuts in this easing cycle. Interest rate cuts are normally positive for gold as they reduce the opportunity cost of holding gold," ANZ Bank noted.

The dollar fell following the PPI release, with the ICE dollar index last seen down 0.4 points to 102.74.

Treasury yields also fell, with the U.S. two-year note last seen paying 3.963%, down 6.5 basis points, while the yield on the 10-year note fell 4.8 basis points to 3.86%.