Gold Hits Two Month High, Pulls Back After PPI Data

This week delivered back-to-back inflation reports. On Wednesday, July’s Consumer Price Index (CPI) rose 3.4% year-over-year, matching expectations. On Thursday morning the Bureau of Labor Statistics published July’s Producer Price Index (PPI): final demand was unchanged month-over-month, and annual producer prices cooled to 4.7% from June’s 5.5%.

Taken together, those readings provide two consecutive months of evidence that price pressures are easing. Gold climbed to a two-month high on Wednesday before giving back some gains on Thursday as energy costs reminded markets that inflation risks remain. Silver drew fresh institutional attention with a new price target. Below are the five developments currently shaping gold and silver markets.

What did the July PPI report actually show, and why does it matter for gold?

July’s PPI showed final demand prices flat on the month, softer than the 0.2% increase the market had expected. On an annual basis producer prices rose 4.7%, a meaningful decline from June’s 5.5% reading. The composition of the report is important: goods prices fell 0.7% in July while services rose 0.2%. A significant portion of the headline improvement came from lower energy costs within goods.

A narrower core PPI measure — which excludes food, energy and trade services — climbed 0.4% month-over-month after nearly flat movement in June. That acceleration drew more attention from policymakers than the headline number. Gold initially rallied toward $4,450 per ounce on the print, then retreated as markets balanced the mixed signals.

At the time of this update, spot gold traded near $4,376 per ounce, down roughly $32 on the day. The pullback reflects a simple calculus: services inflation and elevated energy prices mean the Federal Reserve has not yet received a clean signal that inflation is definitively under control.

How did two months of cooling inflation change the odds of a September Fed rate hike?

Before last week’s jobs report, traders using the CME FedWatch tool priced about a 54% chance of a rate increase at the September Federal Open Market Committee meeting. Weaker-than-expected July payrolls pushed that probability lower to about 46%, and Wednesday’s in-line CPI reading reduced it further to roughly 40%. Thursday’s soft PPI reinforced the same direction.

The link to gold is direct: falling rate-hike expectations tend to lower real yields, and lower real yields reduce the opportunity cost of holding non-yielding assets like gold. When real yields on Treasuries decline, bullion becomes relatively more attractive versus bonds. That dynamic explains gold’s immediate reaction to the CPI and PPI prints, even though energy-driven risks kept some selling pressure in place. The September 17 FOMC meeting is now a key focus for traders and investors.

Why are gold ETFs attracting institutional money again after months of outflows?

Gold exchange-traded funds posted five consecutive sessions of net inflows this week. SPDR Gold Shares alone drew about $1.44 billion in the week ending August 7. Globally, gold ETFs added roughly $3 billion in July, reversing two months of outflows. Silver ETFs also saw inflows during the same period.

These flows suggest the wave of redemptions that removed about $6.4 billion from the market between May and June has subsided and longer-duration buyers are re-entering. Spot silver traded near $64.78 per ounce during this update, with the gold-to-silver ratio close to 67.6. Since the long-term average ratio since 1971 is around 60:1, silver currently appears roughly 13% cheaper relative to gold versus that historical benchmark — a relative discount that can attract institutional interest as flows return.

What is behind Citi’s $90 silver price target, and what would it take to get there?

Citi analysts reiterated a near-term $75 per ounce target for silver and a $90 target over six to twelve months, against a spot price near $65. Their thesis rests on three main drivers: investment demand overtaking industrial demand as the primary price driver; a potential de-escalation in the Strait of Hormuz that would ease energy-price pressures and weaken the dollar; and robust physical demand in India, where domestic premiums are elevated heading into the fourth-quarter wedding and festival season.

Citi also sees the global silver market remaining in deficit through 2027, supported by demand from AI infrastructure, 5G networks and electric vehicles. A $90 target implies a roughly 39% increase from today’s levels, according to the bank’s note.

Is the silver structural deficit still growing, and what does that mean for price?

The Silver Institute’s World Silver Survey 2026 projects a sixth consecutive annual supply deficit, estimated at about 46.3 million ounces. Physical investment demand is forecast to rise roughly 20% to 227 million ounces this year. Solar manufacturers have reduced silver intensity by about 19% in 2026 through thrifting — cutting the silver content per cell — yet the market deficit has continued to widen.

The reason is that mine supply is shrinking faster than industrial demand is falling. Total above-ground supply cannot keep pace with consumption even after solar thrifting. At today’s price near $64.78, silver remains more than 46% below its January 2026 all-time high of $121.62. A structural deficit does not automatically translate into immediate price jumps; instead it sets a durable floor. As long as annual consumption exceeds production, available silver to satisfy investment demand is constrained regardless of short-term movements in real yields or the dollar.

Gold is up 10% this month. So why is it still $1,200 below its record?

Gold has rallied roughly 10% in August, its best monthly performance since the January peak. That strong monthly gain, however, sits against a larger backdrop: at about $4,376 per ounce gold remains roughly $1,213 below the all-time high of $5,589.38 set on January 28, 2026. The $4,500 level — near the 200-day moving average — has not yet been decisively tested or cleared.

August’s move reflects a market repricing two factors simultaneously: a Fed that appears increasingly unlikely to hike in September, and a geopolitical backdrop that has eased slightly following diplomatic talks but remains unresolved. Both factors are meaningful, but neither alone signals the end of the correction. The structural case for holding physical gold — given sovereign debt levels and the scale of global interest payments — remains intact regardless of a single month’s price action.

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SOURCES
1. Bureau of Labor Statistics — Producer Price Indexes, July 2026 (USDL-26-1380, August 13, 2026)
2. Bureau of Labor Statistics — Consumer Price Index, July 2026 (August 12, 2026)
3. CME Group — FedWatch Tool, Federal Reserve September 2026 meeting probabilities
4. World Gold Council — Gold ETF flows, July 2026 (published August 10, 2026)
5. Citi — Silver market research note (August 12, 2026)
6. Silver Institute — World Silver Survey 2026: supply deficit and investment demand projections
7. GoldSilver.com — Live gold and silver spot prices (August 13, 2026)

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions.

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