Gold, Bitcoin Slide as U.S. Inflation Runs at 5.4% and Yields Climb

Gold and Bitcoin retreated on Thursday after an upside surprise in U.S. inflation data lifted Treasury yields and reinforced expectations for another Federal Reserve rate increase, dampening appetite for non-yielding assets. Spot gold fell more than 1% to around $4,358 an ounce. Bitcoin also weakened as investors rotated toward higher-yielding alternatives. U.S. producer prices for August rose 0.4% month over month and 5.4% year over year, slightly above the 5.3% consensus. Markets focused on rates. The 10-year Treasury yield hovered near 4.9%. Pricing in fed funds futures lifted the implied odds of a September hike to about 70%, up from roughly 62% before the PPI release. Gold's move stood out given strong institutional buying. World Gold Council data for August showed global gold ETFs pulled in $18 billion, the second-largest monthly inflow on record. Holdings rose by 121 tonnes to a record 4,189 tonnes, and assets under management climbed 16% to $615 billion. Europe led with $7.9 billion of inflows, while North American funds added $7.7 billion. The surge in ETF demand supports the longer-term institutional case for bullion, but Thursday's selloff highlighted how a jump in real yields and rate expectations can overwhelm near-term flows. Gold ETFs have increasingly served as a liquid proxy for physical holdings, making flows a key read on institutional positioning. Bitcoin's decline echoed the same yield dynamic. Neither gold nor Bitcoin generates income, and with Treasury yields pushing toward 5%, government bonds become more competitive. The pullback followed the Bitcoin-gold ratio touching about 18 in recent days, after Bitcoin markedly outperformed gold over the prior month. Oil prices added to the inflation backdrop. Brent moved above $100 as Middle East supply risks intensified, amplifying inflation concerns. Coinpaper recently noted how quickly crude rebounded from July lows near $72 during the move through the $100 level. Attention now turns to Friday's U.S. CPI report. For gold, the question is whether record ETF demand reasserts itself once the rate shock subsides. For Bitcoin, another strong inflation print could keep pressure on risk assets and extend the headwind from near-5% Treasury yields.