Gold Gains as Softer US Inflation Shifts Fed Outlook

Gold prices advanced after a surprise drop in the June US Producer Price Index (PPI), with one report noting the price moving above $4,050. The soft inflation data weakened the US Dollar against a basket of major currencies and reinforced market expectations that the Federal Reserve might keep interest rates unchanged at its upcoming meeting. While the Fed Chair has not commented on policy, other officials' views are being closely watched, including one who sees inflation peaking at 4%.

China's Economic Growth Slows

Recent data from China indicates that economic growth is losing momentum, with second-quarter GDP expanding at a slower pace than in the first quarter. Analysts note that the growth appears to be led by industrial and high-tech production, while domestic demand remains weak, as evidenced by pressure on retail sales and property investment. This has led to observations that the country may need to consider additional policy support.

Growing Economic and Geopolitical Headwinds

Several major economies are confronting significant domestic pressures, adding to global market uncertainty. In Japan, a poll revealed that nearly half of the country's firms report being hurt by the central bank's interest rate hikes, while the United Kingdom's next prime minister is expected to inherit a substantial fiscal challenge. Meanwhile, concerns are rising over potential new tariffs within a US sanctions bill directed at Russia.