Stocks Up Again As Inflation Falls, Gold Fails to Make New Highs

Gold had another try at the upside earlier today, but it failed to make a new all-time high and reversed lower after the US CPI inflation report. Today we had the US CPP inflation after the PPI data yesterday, which has left Gold bearish diving $40, while stock markets continued yesterday’s bullish momentum.

Improving Market Sentiment and Tech Stock Surge

Risk sentiment has been on the mend following the early-August downturn, with the market now showing a more positive outlook. Investors are increasingly confident that the U.S. economy is in better shape than initially feared and that the Federal Reserve will intervene if needed.

This optimism has fueled a sharp rise in tech stocks this week. After yesterday’s lower PPI inflation report, U.S. stocks continued their upward trend into today, buoyed further by softer U.S. CPI consumer inflation. The S&P 500 marked its fifth consecutive day of gains, closing at 5,455 points, up 0.40%. The Nasdaq Composite also recovered from previous losses, closing at 17,192 points.

Consumer Prices Show Slower Growth in July

Consumer prices in July showed an increase of 2.9% year-over-year, down from a 3% rise in June, marking the slowest pace since March 2021. On a month-over-month basis, prices rose by 0.2%, reflecting a continued cooling in inflationary pressures. Yesterday the PPI producer inflation was even softer, which get markets all worked up for even softer CPI figures today. So despite the fall in Consumer Inflation, the odds of FED policy easing are lower now than before the CPI report.

Gold Struggles Below Record High

Gold remains unable to surpass its record high of $2,483.74, with today’s peak falling short at just under $2,480. The metal has dropped by over 2% today after a third unsuccessful attempt to break through the $2,480 level. Although gold is still up for the week, having surged $50 on Monday, it has since pulled back, failing to surpass the July highs. This retreat is largely attributed to the market scaling back expectations for Federal Reserve rate cuts.

Gold Live Chart