{"id":1299,"date":"2026-08-13T22:31:22","date_gmt":"2026-08-13T22:31:22","guid":{"rendered":"https:\/\/goontrading.com\/en\/cooler-cpi-and-ppi-boost-gold-and-ease-rate-hike-bets-but-the-fed-needs-more-from-core-ahead-of-september-experts\/"},"modified":"2026-08-13T22:31:22","modified_gmt":"2026-08-13T22:31:22","slug":"cooler-cpi-and-ppi-boost-gold-and-ease-rate-hike-bets-but-the-fed-needs-more-from-core-ahead-of-september-experts","status":"publish","type":"post","link":"https:\/\/goontrading.com\/en\/cooler-cpi-and-ppi-boost-gold-and-ease-rate-hike-bets-but-the-fed-needs-more-from-core-ahead-of-september-experts\/","title":{"rendered":"Cooler CPI and PPI boost gold and ease rate hike bets, but the Fed needs more from core ahead of September \u2013 Experts"},"content":{"rendered":"

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\"Cooler<\/p>\n

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(Kitco News) \u2013 Gold prices got a boost from a reassuringly in-line CPI report on Wednesday, and while Thursday morning\u2019s equally benign PPI print didn\u2019t push prices higher, the yellow metal has successfully broken out of its recent range and is holding above $4,350 on Thursday afternoon, exactly $100 below its post-CPI peak.\u00a0<\/p>\n

But while many commentators are quick to declare victory over inflation after two months of positive data, industry experts believe the Federal Reserve\u2019s view will be more nuanced and more cautious \u2013 and rate cuts may still be on the horizon.<\/p>\n

Scott Anderson, Chief U.S. Economist at BMO, said the CPI report painted a tamer picture of consumer price pressures for a second month in a row, but believes the Fed will want to remain in wait-and-see mode.\u00a0<\/p>\n

\u201cWhile not definitive, the report should further ease the Fed\u2019s fears about an energy-driven inflation spiral,\u201d he said. \u201cMost major price components revealed visible cooling compared to the first three months of the war.\u201d<\/p>\n

\u201cThe cool down in consumer inflation over the last two months, along with the weaker than expected payroll report for July, should give the FOMC some more breathing space to maintain the current policy rate at the September policy meeting, though we will get one more CPI report for August before the Fed has to make its decision,\u201d he said. \u201cThe Fed will need to see more evidence in future inflation reports that core services inflation is truly moderating before they take their rate hike threat completely off the table.\u201d<\/p>\n

Diane Swonk, Chief Economist at KPMG, said July\u2019s CPI report delivered a sideways headline reading, but not a decisive turn lower in inflation.\u00a0<\/p>\n

\u201cGasoline will likely add more noise in August, while food prices are being restrained by discounting rather than broad-based relief,\u201d she said. \u201cThat distinction matters. Inflation is cooling at the headline level, but the consumer is still absorbing the aftershocks of the price surge while the shocks keep coming.\u201d<\/p>\n

Swonk said that while supply side inflation was supposed to be a one-time event, it has become a constant. \u201cThat is eroding the Fed\u2019s inflation-fighting credibility,\u201d she warned. \u201cService sector inflation remains elevated, which will only harden the resolve of hawks within the Fed.\u201d<\/p>\n

\u201cWe are essentially back where we were at the start of the year, before the war, when their concern about the persistence of inflation intensified, while\u00a0inflation is likely to get hotter in August,\u201d she said. \u201cThe September meeting is still live. We still expect rate hikes by year-end, but the timing is tricky due to deep divisions within the Fed.\u201d<\/p>\n

Daniel Hynes, Senior Commodity Strategist at ANZ, said after the CPI report that the inflation data cooled rate hike bets and boosted the attractiveness of gold.<\/p>\n

\u201cThe data mean the Fed is likely to remain on hold at its next meeting, leaving the market pricing only a 40% chance of an interest rate hike,\u201d he noted. \u201cThis continues the steady stream of data that have tempered expectations of monetary tightening and should provide further support for gold in the coming months.\u201d<\/p>\n

\u201cInvestors have been steadily increasing their exposure in recent weeks,\u201d Hynes added. \u201cGold backed exchange traded funds saw USD3bn of inflows in July, snapping two straight months of outflows.\u201d<\/p>\n

Derek Holt, Head of Capital Markets Economics at Scotiabank, said CPI came and went with little market fanfare, but it served to further weaken the overly pessimistic market expectations of Fed rate hikes.<\/p>\n

\u201cPricing for the September FOMC meeting slipped and now sits at just 10bps, down sharply from a peak of 27bps toward the end of July,\u201d he wrote. \u201cIt\u2019s pretty clear to date that markets have been overly aggressive in pricing nearer term hikes as July\u2019s 8bps of tightening was countered by a hold and September keeps getting reduced.\u201d<\/p>\n

Holt noted that 2-year Treasury yield has fallen by around 15bps to 4.18% since late July as bonds have become increasingly attractive. \u201cPerhaps this illustrates the point that Chair Warsh shouldn\u2019t outsource monetary policy to markets which has merely upped volatility,\u201d he said. \u201cJust like 2023 with SVB, or the post-GFC period when markets wrongly thought inflation would rip higher.\u201d<\/p>\n

James Knightley, ING\u2019s Chief International Economist in New York, said the details of the CPI report were supportive of a continued Fed pause, but warned that there\u2019s plenty of data still to come ahead of the September meeting.<\/p>\n

\u201cIn terms of 3M annualised core inflation, we are now down to just 1.6%, which, after the poor jobs report last Friday, should leave the Fed hawks less confident on the need for a rate hike, but we do have another job and inflation print plus the annual Jackson Hole symposium before the next FOMC meeting on 16 September,\u201d he said.\u00a0<\/p>\n

Knightley offered four reasons why ING expects inflation to continue cooling into 2027.<\/p>\n

First, gas prices are still above where they would be expected to be relative to oil. \u201cGasoline can continue to contribute to lower headline inflation,\u201d he said. \u201c[I]f we get a deal to reopen the Strait of Hormuz and flow resumes, we should see margins compress, which will deliver lower gasoline costs.\u201d<\/p>\n

Secondly, housing \u2013 the heaviest weighted component in CPI at 35% – is seeing price growth show and rents are actually dropping.<\/p>\n

\u201c[H]ome prices are barely rising 1% and rents are now falling outright in a growing number of states, according to data from Zillow and Realtor.com,\u201d Knightley wrote. \u201cWe expect this dominant component to exert steady downward pressure on overall inflation over the next 12 months.\u201d<\/p>\n

Thirdly, the labor market has worked through its post-COVID distortions. \u201cWe\u2019ve gone from a situation where, in 2022, there were two job vacancies for every unemployed American to being in balance today,\u201d he said. \u201cPrivate wage growth, according to the Employment Cost index, is rising just 3.1% YoY, the same as average hourly earnings. That is fully consistent with 2% consumer price inflation.\u201d<\/p>\n

The fourth reason is the moderation of the Trump administration\u2019s trade tariff policies. \u201cNow that we’ve arguably entered a less onerous tariff regime that includes lots of exemptions, we\u2019re increasingly confident that their upward influence on inflation will rapidly fade,\u201d he said. \u201cFederal budget data show the International Emergency Economic Powers Act (IEEPA) ‘Liberation Day’ tariffs, that were struck down by the Supreme Court, are now being repaid to corporate America\u2026 This boost to corporate cash flow should mitigate cost pressures elsewhere and therefore maintain the disinflationary trend.\u201d<\/p>\n

Knightley acknowledged that Fed has failed to reach its inflation target for the past five years. \u201cNonetheless, progress does appear to be being made and consumer inflation expectations are within tolerable ranges, suggesting little risk of second-round price effects from the energy spike,\u201d he said. \u201cMeanwhile, market inflation expectations are benign, with 10Y break-even inflation rates in line with their 25-year average.\u201d<\/p>\n

\u201cThe market is still pricing a rate hike from the Fed, but we see the more likely course of action is for the Fed to hold rates steady for a prolonged period, well into 2027.\u201d<\/p>\n

And Bill Adams, Chief U.S. Economist at Fifth Third Commercial Bank, said that while headline PPI was cooler than expected, the details of Core PPI have upward implications for July core PCE.\u00a0<\/p>\n

\u201cPortfolio management services jumped 6.5% on the month in the PPI report and are up 22.5% on the year,\u201d he said. \u201cPortfolio management prices\u2019 big July increase will add to core PCE inflation in the next release. But that upward contribution will be revised down on September 30, when the BEA makes annual revisions that make the calculation less sensitive to the level of the stock market.\u201d<\/p>\n

\u201cFor the Fed, the PPI report doesn\u2019t change the big picture on inflation: It\u2019s too high, but core inflation is lower than the headline, and the picture for both improved in July,\u201d Adams wrote. \u201cThe July CPI and PPI reports keep a narrow path open for the Fed to hold rates steady at the September decision. The August CPI and PPI reports will come out before that decision, so today\u2019s data aren\u2019t the final word.\u201d<\/p>\n<\/div>\n

Kitco.com<\/p>\n","protected":false},"excerpt":{"rendered":"

\u26a1 Trade with Ultra-Low Spreads on IC Markets! \u2794 [Link] \ud83c\udf81 Get Your Exclusive XM Deposit Bonus Now! \u2794 [Link] \ud83d\udca1 Master the Markets with FXTM Copy Trading \u2794 [Link] (Kitco News) \u2013 Gold prices got a boost from a reassuringly in-line CPI report on Wednesday, and while Thursday morning\u2019s equally benign PPI print didn\u2019t …<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[40],"tags":[],"class_list":["post-1299","post","type-post","status-publish","format-standard","","category-gold-commodities-trade-news"],"_links":{"self":[{"href":"https:\/\/goontrading.com\/en\/wp-json\/wp\/v2\/posts\/1299","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goontrading.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goontrading.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goontrading.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/goontrading.com\/en\/wp-json\/wp\/v2\/comments?post=1299"}],"version-history":[{"count":0,"href":"https:\/\/goontrading.com\/en\/wp-json\/wp\/v2\/posts\/1299\/revisions"}],"wp:attachment":[{"href":"https:\/\/goontrading.com\/en\/wp-json\/wp\/v2\/media?parent=1299"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goontrading.com\/en\/wp-json\/wp\/v2\/categories?post=1299"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goontrading.com\/en\/wp-json\/wp\/v2\/tags?post=1299"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}