Gold and silver retreat as core inflation data keeps Fed on edge

The latest producer-price index (PPI) report offered a split narrative for investors. While headline final-demand prices remained unchanged in July, the core measure—excluding food, energy, and trade services—climbed 0.4% on the month, reaching a 4.7% year-over-year increase. This underlying price pressure, paired with initial jobless claims rising by 9,000 to 209,000, left the Federal Reserve’s path forward uncertain. Markets are currently pricing in a 40% probability of a September rate hike, keeping the 10-year Treasury yield anchored near 4.7%.

Geopolitical tensions remain a background factor, specifically regarding the Strait of Hormuz. Although U.S. officials maintain the strait is under their control, regional authorities continue to report restricted traffic. This ongoing uncertainty provides a floor for energy prices, with WTI crude near $82 and Brent at $87.70. For precious metals, the situation creates a dual effect: the shipping risks bolster defensive demand, yet any sudden spike in oil prices threatens to reignite inflation, complicating the Fed's monetary policy trajectory. Meanwhile, global stock indices showed modest gains, though the U.K.’s FTSE 100 struggled as mining stocks faced downward pressure.