The daily outlook for XAUUSD is leaning bearish, transitioning from a previously more neutral stance. The recent unexpected surge in US Producer Price Index (PPI) data for July has fueled concerns about persistent inflation, leading to a strong rebound in the US Dollar and a decline in gold prices. While the market still holds onto hopes of a Fed rate cut, the higher-than-anticipated inflation numbers introduce significant uncertainty and challenge the narrative of a quick and decisive dovish turn from the Fed. This creates a cautious and risk-off environment for gold today.

Changes to Weekly Outlook

The previously established weekly outlook, which was likely leaning towards range-bound with a bullish bias due to general rate cut expectations, has been altered. The unexpectedly strong PPI data yesterday has introduced a bearish catalyst, significantly strengthening the US Dollar. This has pushed gold lower, invalidating some of the bullish momentum seen earlier in the week. The market’s focus has shifted from “when will the Fed cut rates?” to “will the Fed be able to cut rates as aggressively as we thought?” This new uncertainty is a negative for gold in the short term, as it erodes its appeal as a safe haven and non-yielding asset.