Economic Indicators - The U.S. July core CPI increased by 0.2% month-on-month, ending a five-month streak of underperformance against expectations, but did not exceed forecasts, leading to heightened interest in rate cuts[1] - The July PPI surged by 0.95%, significantly surpassing the expected 0.2%, indicating ongoing tariff impacts on wholesale prices[1] - Retail sales in July rose by 0.5%, slightly below the expected 0.6%, but showed resilience with a revision from a previous increase of 0.6% to 0.9%[1] Interest Rate Expectations - Current market pricing suggests an 84.5% probability of a rate cut in September, with an expectation of 2.187 cuts throughout the year, which may be overly optimistic[2] - In a more optimistic scenario, the Federal Reserve is expected to cut rates twice this year, in September and December; in a pessimistic scenario, only once in October[2] - The anticipated rate cuts for 2026 are projected to be 4, 5, or 6 times under pessimistic, baseline, and optimistic scenarios, respectively[1] Market Reactions - Following the CPI data, the 10-year U.S. Treasury yield rose by 3.3 basis points to 4.316%, while the 2-year yield fell by 1.2 basis points to 3.751%[1] - The S&P 500 and Nasdaq indices increased by 0.94% and 0.81%, respectively, while gold prices dropped by 1.81% to $3,336 per ounce[1] Geopolitical Context - The recent meeting between Trump and Putin regarding the Russia-Ukraine conflict was positively received, potentially easing geopolitical tensions and improving market risk appetite[2] - The lack of new sanctions from Trump post-meeting may alleviate some tariff-related risks, contributing to a more favorable market outlook[2] Risks and Considerations - Potential risks include unexpected policy shifts from Trump, excessive rate cuts by the Federal Reserve leading to inflation rebound, and prolonged high-interest rates causing liquidity crises in the financial system[2]

Group 1 - The core point of the article is the significant drop in gold prices on May 12, with international spot gold falling below $3300 per ounce and reaching a low of $3207 per ounce, reflecting a notable daily decline [1] Group 2 - Geopolitical tensions have eased, leading to a decrease in safe-haven demand for gold, as evidenced by the calming signals from the India-Pakistan conflict and renewed negotiation proposals from Russia regarding Ukraine [3] - Expectations regarding the Federal Reserve's monetary policy have shifted, with a growing anticipation of delayed interest rate cuts, which could increase the opportunity cost of holding gold and subsequently lower its demand [4] Group 3 - Technical selling pressure has intensified, with a significant reduction in net long positions in gold and a high percentage of programmatic selling contributing to the price drop [5] Group 4 - Domestic consumption demand for gold has weakened post the May Day holiday, with reduced market demand and some brands resorting to discount promotions to accelerate inventory turnover, further exerting downward pressure on gold prices [7] Group 5 - The combined effects of geopolitical factors, monetary policy expectations, technical selling, and domestic demand fluctuations have collectively contributed to the sharp decline in gold prices on May 12 [9]