Gold slips as cooling inflation softens demand for metal hedges

The producer price index (PPI) remained flat in July, missing expectations for a 0.2% increase and fueling a shift in market positioning toward a potential Federal Reserve hold in September. Following the release, the 10-year Treasury yield slipped to 4.648%, while the probability of a September rate hike dropped to 34.6% from 40.6%. Jobless claims saw a slight uptick, rising 9,000 to 209,000.

Equity markets maintained a firmer tone as investors digested the data, with the S&P 500 climbing 0.7% to a record 7,798.99. Conversely, energy markets faced downward pressure; Brent crude fell 2.1% to $87.07 a barrel on weaker demand signals, even as geopolitical tensions in the Strait of Hormuz persist. For gold, the market remains caught between two forces: lower yields provide a supportive environment, yet the easing of inflation pressure limits the metal's defensive utility. Technically, gold bears are now targeting a break below the $4,332.00 support level, while bulls look to reclaim the $4,448.00 resistance mark.