Investment Rating - The report maintains a cautious stance on inflation forecasts while awaiting further policy actions [3][19]. Core Insights - The year-on-year Consumer Price Index (CPI) turned positive in June, marking a surprise after four consecutive negative readings, which may indicate potential reflation in China [3][4]. - The Producer Price Index (PPI) deflation deepened unexpectedly, highlighting a divergence in price trends among different sectors, particularly between auto and steel prices [4][19]. - The report emphasizes the importance of supply-side reforms (SSR2.0) and the role of demand in shaping inflation expectations [19]. Summary by Sections CPI Analysis - The CPI reading for June was +0.0% YoY, compared to a prior reading of -0.1% YoY, with a sequential change of -0.1% MoM [3][5]. - Significant price increases were noted in the "other goods and services" category, which includes jewelry, with a +8.1% YoY change [5][8]. - Core inflation rose by +0.7% YoY, with core goods prices increasing by 0.9% YoY [5][19]. PPI Analysis - The PPI reading was -3.6% YoY, contrasting with market expectations of a narrower contraction [4][19]. - The PPI for the auto sector showed stabilization, while ferrous metals and non-metallic minerals reported negative changes, indicating a mixed outlook for SSR2.0 candidates [4][19]. Supply Side Reform Insights - The report suggests that the upcoming Politburo meeting and action plans from relevant ministries will be crucial for future inflation trajectories [19]. - The divergence in price trends between sectors like steel and auto underscores the need for targeted demand-side policies [19].

Group 1 - The core point of the news is the significant increase in gold prices, with spot gold reaching a high of $3,387.09 per ounce, marking a daily increase of 1.08% [1] - COMEX gold futures also saw a rise, reported at $3,378.00 per ounce, with a daily increase of 1.68% [1] - The price of gold jewelry has increased by over 20 to 200 yuan compared to the holiday period [1] Group 2 - Physical gold prices have risen from the low prices during the May Day holiday, with major retailers like Chow Tai Fook and Chow Sang Sang pricing gold at 1,026 yuan per gram, reflecting a rise of 2.81% [5] - The price of gold at various retailers has shown significant increases overnight, with some products rising by over 20 to 200 yuan [5] - The gold price in the domestic market reached a high of 1,061 yuan per gram on April 22, 2023 [7] Group 3 - The gold price has seen a cumulative increase of over 26% this year, with the World Gold Council reporting that global gold prices broke historical highs 20 times in the first quarter [9] - Despite the rising gold prices, global gold jewelry consumption has decreased by 21% year-on-year, reaching the lowest level since 2020 [9] - There has been a significant increase in gold investment demand, with a total of 551.9 tons in the first quarter, representing a year-on-year increase of 170% [9]