[SMM Precious Metals Update] Recently, the US CPI and PPI data have shown divergent trends. Although market expectations for the magnitude of the US Fed's interest rate cut in September have decreased, favorable factors for rate cuts still exist in the coming September and October, providing some support to the precious metals market. Specifically, COMEX gold prices fell 2.21% last week, reaching $3,381.70 per ounce, while SHFE gold main contract also dropped 1.52%, closing at 775.8 yuan per gram.
A deeper analysis of the data shows that the US CPI in July rose 2.7% YoY, slightly below the market expectation of 2.8% but flat with the previous month. Notably, the core CPI increased 3.1% YoY, exceeding the expected 3.0% and hitting a new high since February, indicating that inflationary pressures in the US remain under control. This data temporarily strengthened market expectations for a September rate cut, even raising the probability of a 50-basis-point cut.
However, the US PPI data for July posed a challenge to these rate cut expectations. The PPI rose 3.3% YoY, reaching its highest level since February this year, significantly surpassing the expected 2.5% and the previous value of 2.3%. Meanwhile, the PPI increased 0.9% MoM, marking the largest gain since June 2022. This data undoubtedly dampened market expectations for a rate cut.