Gold Price Surge Hinges on July PPI Data
Gold prices have been steadily increasing since August, reaching two-month highs as investors wait for the release of July's producer price index (PPI) data.
The market-implied probability of a September rate increase has dropped to around 40% following last week's consumer-price report, which showed a 0.1% monthly increase and a 3.4% annual gain in inflation.
KCM Trade analyst Tim Waterer sees the current pause as consolidation after the CPI-driven advance rather than a reversal in sentiment, with traders looking for confirmation from PPI before adding to the move.
A softer July reading would reinforce the idea that pipeline inflation is easing and could further weaken expectations for a September Fed increase, while a stronger number would complicate the trade by potentially pushing Treasury yields and the dollar higher.