Gold Price Continues to Tread Water Above $3,300 Following Unchanged US PPI

Economic

Commodity

Summary:

The gold market remains stuck in neutral, holding solid support above $3,300 an ounce but unable to gain significant traction, even as wholesale inflation pressures remained unchanged last month.

The headline Producer Price Index (PPI) was flat in June, following a 0.1% increase in May, the U.S. Labor Department announced on Thursday. The latest inflation data came in cooler than expected, as the consensus forecast had called for a 0.2% increase.

Over the past 12 months, headline wholesale inflation rose 2.3%, according to the report. Annual inflation was also weaker than expected, with economists anticipating a 2.5% increase. The prior month’s annual inflation figure was revised higher to 2.7%, up from the initial estimate of 2.6%.

Excluding volatile food and energy prices, core PPI was also unchanged last month, following a 0.1% rise in May. According to consensus estimates, economists had forecast a 0.2% increase.

According to some analysts, the headline inflation data should provide some support for gold, as it indicates inflation pressures are relatively under control—potentially giving the Federal Reserve room to cut interest rates later this year.

However, some economists also note that economic uncertainty and inflation fears remain elevated due to President Donald Trump’s import tariffs and the ongoing global trade war. PPI is considered a leading inflation indicator, as producers typically pass higher input costs on to consumers.

Spot gold last traded at $3,333 an ounce, up 0.31% on the day.

Source: Kitco

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Warren Takunda

Economic

London stocks had nudged into the black by midday on Wednesday, as investors mulled a hotter-than-expected UK inflation print.

The FTSE 100 was 0.1% firmer at 8,950.13.

Figures released earlier by the Office for National Statistics showed that annual inflation rose to 3.6% in June from 3.4% in May, versus expectations for it to remain unchanged. This marked the highest since January 2024, when it was 4.0%.

The ONS said transport, particularly motor fuels, made the largest upward contribution.

Food price inflation also increased for the third consecutive month, to 4.5% - its highest annual rate since February 2024.

Core inflation - which excludes energy, food, alcohol and tobacco - increased to 3.7% from 3.5%. Analysts were expecting it to remain unchanged.

ONS acting chief economist Richard Heys said: "Inflation ticked up in June driven mainly by motor fuel prices which fell only slightly, compared with a much larger decrease at this time last year.

"Food price inflation has increased for the third consecutive month to its highest annual rate since February of last year. However, it remains well below the peak seen in early 2023."

Martin Sartorius, principal economist at the Confederation of British Industry, said: "June’s stronger-than-expected inflation print will raise concerns that recent price pressures - driven by higher household energy prices and the passthrough of increased employment costs - could potentially re-entrench inflation in the economy.

"While we still expect the Bank of England’s Monetary Policy Committee to continue gradually cutting rates, today’s upside inflation surprise means its August decision will be finely balanced. Underlying price pressures show signs of easing as the labour market cools, which should support a rate cut. However, some members of the MPC will be wary of loosening too quickly and, consequently, risk inflation remaining above target for longer."

In equity markets, Intermediate Capital Group was the standout performer on the FTSE 100 as it said assets under management rose 3% in the first quarter to $123bn, with fee-earning AUM up 4% to $82bn.

Elsewhere, Hiscox jumped after an upgrade to ‘overweight’ by Morgan Stanley.

Rio Tinto gained as it revealed that US tariffs added $300m in first half costs on aluminium exports from Canada, but also said that annual copper output would be at the higher end of estimates.

Rio said that while a "substantial" part of the extra cost was offset by higher premiums on US sales when the 25% tariff was introduced in March, the premium could no longer fully compensate when President Donald Trump doubled duties on Canadian aluminium to 50% in June.

The mining giant also said annual copper production was now expected to be at the higher end of estimates after a 13% rise in output during the second quarter due to the successful ramp up of the Oyu Tolgoi underground mine and good performance at Escondida.

Bloomsbury Publishing advanced as it said full-year results were on track to meet targets, driven by the ongoing popularity of blockbuster authors such as Sarah J Maas and JK Rowling.

Bytes Technology was boosted by an upgrade to ‘buy’ from ‘hold’ at Jefferies, which cited an attractive risk/reward.

On the downside, AstraZeneca fell after it said its investigational treatment for amyloidosis failed to show a statistical significance in late-stage trials. AL amyloidosis is a rare, progressive disorder caused by defective plasma cells in bone marrow.

Recruiter Hays was knocked lower by a downgrade to ‘underweight’ from ‘equalweight’ at Morgan Stanley.

Source: Sharecast

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Blue River

Technical Analysis

USD/JPY advanced above its 200-day exponential moving average (EMA) for the first time since February on Tuesday, while slightly extending its ascent to a new three-month high of 149.17 earlier today before losing momentum.

The bullish price action coincides with growing political uncertainty in Japan, as the ruling Liberal Democratic Party and its coalition partner face the risk of losing their majority in the upper house in Sunday’s election. However, a sustained move higher remains uncertain, given that the price has closed above the upper Bollinger Band and both the RSI and stochastic oscillator are signaling overbought conditions.

A decisive breakout above the 50% Fibonacci retracement of the January–April downleg could pave the way for an extension toward the 151.00 barrier and the 61.8% Fibonacci level at 151.60. A move beyond that point may open the door for a rally toward 154.70.

On the downside, if bullish pressure fades, the price could find immediate support between the 200-day EMA at 147.85 and the 38.2% Fibonacci level at 147.13. Further declines may stabilize near 145.85. However, only a drop below 143.35 would signal a bearish trend reversal.

Overall, USD/JPY appears cautious, as overbought conditions hint at a possible pullback or consolidation in the short term. The next bullish phase is likely to resume above 149.40.

Source: ACTIONFOREX

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Michelle

Political

Israel intensified its attacks on Syria, striking the country’s military headquarters in Damascus around midday on Wednesday.

The Israel Defense Forces, which announced the strike on the gates of the facility, said it is also hitting southern Syria and is “prepared for various scenarios.”

Israel has stepped operations in Syria since Monday and says it’s acting in defense of the Druze community, a minority group the Jewish state has pledged to protect.

Syria’s state-run agency reported an explosion in Damascus and drone attacks in Suwayda, a southern part of the country close to Israel. There have been deadly clashes in Suwayda in recent days between Druze and Bedouin groups. Syria’s government has moved troops into the area and says it’s trying to quell the violence.

Earlier on Wednesday, Israeli Defense Minister Israel Katz said the military will “continue to attack regime forces until they withdraw” from Suwayda and “will also soon raise the bar of responses against the regime if the message is not understood.”

The US asked Israel to stop its strikes on Syria, an Axios reporter said on Tuesday. The reporter, citing an unnamed US official, said Israel promised to cease strikes on Tuesday evening.

Source: Bloomberg Europe

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Gerik

Economic

Tariffs Revive Inflation Fears, Complicating Fed’s Timing

The Federal Reserve now finds itself in a familiar yet precarious position. After months of warnings from economists and businesses, the June inflation data confirmed that tariffs are pushing up prices for imported goods. While the increase was modest, its confirmation in official metrics signals a material change in the inflation landscape that the Fed can no longer ignore.

This development directly challenges the Fed’s 2% inflation target. Price increases have already appeared in consumer goods such as furniture, clothing, and appliances areas sensitive to tariff-related cost shocks. Although overall inflation remains contained, the composition and trajectory of price growth suggest a structural threat, particularly if more tariffs are implemented or prolonged.

Policy Paralysis as Markets Price in Fed Inaction

Markets responded by locking in expectations that the Fed will remain on hold through at least the summer. According to the CME FedWatch tool, the probability of no rate change in July rose to 97%. Similarly, expectations of a September cut dropped from 63% to 56% in one week. These shifts reflect investor sentiment that the Fed must remain cautious, not because inflation is soaring, but because of growing uncertainty surrounding its trajectory.

Scott Anderson from BMO Capital Markets described the June report as “a step in the wrong direction,” reinforcing the view that the Fed will need more time to evaluate whether current inflation pressures are temporary or persistent. This logic is rooted in lessons from the post-COVID inflation cycle, during which the Fed’s delayed response allowed inflation to entrench itself, necessitating aggressive rate hikes that followed.

Transitory or Persistent? Fed Risks Repeating Past Mistakes

Some market participants argue that tariff-induced inflation may be a one-time adjustment akin to a reset in relative prices rather than a structural shift. In this view, the Fed should look through the data and treat it as a temporary deviation, not a long-term threat. This narrative, however, carries echoes of the Fed’s 2021 misjudgment, when officials labeled post-pandemic inflation as “transitory,” only to find themselves behind the curve.

The risk now is not just from current tariffs, but from the uncertainty surrounding future ones. Each round of tariff announcements creates a new potential inflation shock, making it harder for the Fed to distinguish noise from signal. Ryan Sweet of Oxford Economics noted that if these tariff threats materialize, inflation could build gradually over several months, requiring the Fed to extend its wait-and-see posture unless the labor market weakens sharply.

Waiting Without Acting: A Policy Stalemate

The Fed currently faces a classic policy dilemma: inflation isn’t high enough to justify rate hikes, but it’s also not falling fast enough to warrant cuts. Meanwhile, the labor market remains resilient, removing any urgency for dovish action. This stalemate forces the central bank into a reactive stance, dependent on lagging indicators, and vulnerable to future inflation surprises.

The danger lies not in the current numbers, but in the uncertainty they represent. A single inflation report may not shift policy, but a pattern of incremental increases driven by protectionist trade policy could catch the Fed off guard again. In that case, waiting too long to act could result in a repeat of the post-COVID policy error, where inflation gained momentum while the Fed hoped it would dissipate on its own.

Inflation Moderation or Policy Paralysis?

In the coming months, the Federal Reserve’s credibility may rest on its ability to differentiate between transient price pressures and entrenched inflation. If tariffs continue to generate modest, recurring price increases, the risk of inflation reacceleration becomes real. But without a clear labor market downturn, the Fed may remain sidelined.

For now, financial markets are calm, but that calm reflects indecision rather than confidence. The Fed’s challenge is not merely economic; it is one of judgment, timing, and avoiding a déjà vu scenario that could once again test the limits of its policy toolkit.

Source: Yahoo Finance

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Gerik

Economic

Tariff Shock Hits Fragile Sectors in a High-Unemployment Economy

South African Reserve Bank Governor Lesetja Kganyago has issued a stark warning: President Trump’s incoming 30% tariff on South African goods could cause severe job losses across key export sectors. Scheduled to begin on August 1, the tariffs are expected to particularly impact agriculture and automotive exports two of the country’s most labor-intensive and trade-dependent industries.

In a radio interview with station 702, Kganyago emphasized the threat is not abstract but immediate and quantifiable. The projected toll approximately 100,000 jobs is significant in an economy where unemployment already stands at 32.9% officially, and at 43.1% under broader measures. This suggests a strong causal relationship between the tariffs and potential employment losses, especially in vulnerable communities.

Agricultural Sector Faces Direct Risk of Collapse

The agricultural sector is poised to bear the brunt of the impact, due to its reliance on low-skilled labor and high export orientation. Citrus fruits, table grapes, wine, fruit juices, macadamia nuts, and ostrich leather are all part of the export basket now exposed to steep U.S. tariffs. These goods are vital not just to national GDP but to the livelihood of rural economies, especially in the Western Cape.

In Citrusdal, a farming town in the Western Cape heavily reliant on U.S. demand, the citrus industry alone accounts for an estimated 35,000 jobs. The tariffs threaten to collapse local economies built around these export pipelines. This reflects a direct linkage between trade policy shifts and employment destabilization in export-oriented agricultural communities.

Automotive Industry Experiences Immediate Decline

The impact on the automotive sector is already visible. Kganyago cited an 80% drop in car exports to the U.S. since Trump’s initial tariff imposition in April. This figure illustrates a rapid response in trade flow, with measurable consequences for manufacturers and their supply chains. As automotive production is concentrated in regions with high labor dependence, the ripple effect is likely to exacerbate unemployment and stall industrial investment.

The decline in exports reflects a cause-effect dynamic where cost-driven import disincentives in the U.S. translate to sudden demand shocks for South African producers, highlighting the vulnerability of small and mid-sized economies in global trade realignments.

Broader Economic Implications and Policy Uncertainty

While farmer groups and industry bodies raise alarms over sector-specific fallout, the broader macroeconomic concern is how this tariff escalation could compound existing structural weaknesses. With youth unemployment persistently high and economic growth sluggish, South Africa lacks the policy flexibility to absorb a sudden contraction in its export earnings.

The central bank’s warning coincides with a global environment where trade tensions are reshaping supply chains and forcing countries to reevaluate market dependencies. Without alternative trade agreements or rapid market diversification, South Africa may struggle to mitigate the impact of U.S. protectionism.

Structural Fragility Meets External Shock

The potential job losses illustrate not only the harsh consequences of unilateral tariff action but also the structural fragility of South Africa’s labor market. With few domestic buffers and limited fiscal space, the country could see localized recessions in export-reliant regions if alternative markets are not secured swiftly.

The effectiveness of South Africa’s response diplomatic or trade-driven will determine whether this shock is temporary or becomes a catalyst for deeper socio-economic instability. The risk is no longer theoretical; the countdown to August 1 has made it immediate.

Source: Reuters

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Glendon

Economic

Forex

President Trump has flagged that US tariffs on pharmaceutical imports are likely to kick in on Aug. 1, with duties on semiconductors also in line for implementation then too.

“Probably at the end of the month, and we’re going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we’re going to make it a very high tariff,” Trump told reporters on Tuesday.

The timing means the drug and chip levies would come in alongside the paused "reciprocal" tariffs laid out in April.

Also on Tuesday, Trump said his team has struck a trade deal with Indonesia that will see goods from the country face a 19% tariff.

The announcement comes after Trump unveiled a new batch of letters to over 20 trade partners outlining tariffs on goods imported from their countries beginning in August. The letters set new baseline tariff levels at 20% to 40% — except for a 50% levy on goods from Brazil in a move that waded into the country's domestic politics.

Indonesian goods faced a 32% tariff rate on Aug. 1, according to the July 7 letter Trump sent to Indonesia's President Prabowo Subianto. Trump on Tuesday said US goods would face no import tax in Indonesia.

Trump has also escalated tariff tensions with Canada, Mexico, and the European Union recently. Last week, Trump announced a 35% tariff on Canadian goods and followed that up with promises of 30% duties on Mexico and the EU.

The EU has been preparing options for a trade deal, while also preparing an extensive list of counter-tariffs that would affect 72 billion euros ($84 billion USD) of American products should talks fail.

"There will be a huge impact on trade,” the EU's chief negotiator said Monday. "It will be almost impossible to continue trading as we are used to in a transatlantic relationship."

As markets focus on US talks, here is where things stand with other key partners:

Vietnam: Trump said a deal with Vietnam will see the country's imports face a 20% tariff — lower than the 46% Trump had threatened in April. He also said Vietnamese goods would face a higher 40% tariff "on any transshipping" — when goods shipped from Vietnam originate from another country, like China. According to reports, Vietnam's leadership was caught off guard by Trump's announcement last week that it agreed to a 20% tariff and is now seeking to lower the rate.
India: Trump's tariffs on Brazil have raised the stakes for India, another member of the BRICS coalition. Bloomberg reported that the countries are working toward a framework deal that could see US tariffs on goods from India drop below 20%.
Russia: Trump threatened "secondary" tariffs on Russia of up to 100% as he attempts to pressure the country into negotiating an end to the war in Ukraine.