Guangda Futures 0814 Gold Commentary: Inflation Expectations Fall, Gold Declines Instead of Rising

Overnight, gold fluctuated and weakened; London spot gold fell by 1.34%, while SHFE gold dropped by 1.24%. With the release of US PPI data, declining energy prices became the main driver for cooling the PPI, easing inflationary pressure. US stocks moved higher, risk sentiment increased, further putting pressure on gold prices. Gold continues to fluctuate in the short term—focus tonight on US retail sales data and developments between the US and Iran.

The US PPI for July remained unchanged month-on-month, lower than the market's mild increase expectation, while the year-on-year growth fell from 5.5% in June to 4.7%. Core PPI rose by 0.2% month-on-month, below the expected 0.3%, and its year-on-year growth slowed to 4.2%. The US PPI for July came in below market expectations, combined with previously cooled CPI data, further easing inflation pressure. Market expectations for a short-term rate hike by the Federal Reserve remain under pressure, and the probability of a rate hike in September has fallen below 40%. However, there are still internal divisions within the Fed: Richmond Fed President Barkin supports keeping rates unchanged, while Cleveland Fed President Harker reiterated his stance on raising interest rates. Additionally, according to Bloomberg, the Japanese government supports the Bank of Japan’s recent interest rate hike, with the next rate hike window likely falling in September or October. Although the probability of a US rate hike in September or even within this year continues to drop, gold prices have declined instead of rising. This may signal profit-taking as bullish factors are realized, and there may also be some connection with market liquidity panic triggered by expectations of a Bank of Japan rate hike. Gold prices face resistance at key levels, and divergence is increasing. Overall, given a decline in Fed September rate hike expectations, gold may still maintain high volatility.

Written by: Li Qi

Professional Qualification: F3046227

Trading Advisory Qualification: Z0016145

Editor: Zhu Henan