Gold Hit a Two-Month High. Then It Pulled Back. The PPI Data That Caused Both Moves Is What Matters.

Published: 08-13-2026, 11:17 am

Two back-to-back inflation readings landed this week. Wednesday brought July CPI at 3.4% year-over-year, in line with forecasts. Thursday morning delivered July PPI with final demand unchanged month-over-month and annual producer prices cooling from 5.5% to 4.7%.

Together, they handed the Fed two consecutive months of evidence that price pressures are easing. Gold reached a two-month high on Wednesday, then gave back ground Thursday as energy costs reminded traders that the inflation story is not entirely finished. Silver, meanwhile, attracted a fresh institutional price target. Here are the five developments shaping gold and silver right now.

What Did the July PPI Report Actually Show, and Why Does It Matter for Gold?

The Bureau of Labor Statistics released the July Producer Price Index this morning. Final demand prices came in unchanged month-over-month, softer than the 0.2% gain the market expected. On an annual basis, producer prices rose 4.7%, a notable step down from June’s 5.5%.

The composition tells the real story: goods prices fell 0.7% in July while services rose 0.2%, and energy’s decline within goods is carrying a significant portion of the headline improvement. The narrower core measure — which strips out food, energy, and trade services — climbed 0.4% month-over-month after barely moving in June, quadrupling June’s pace and drawing more Fed attention than the headline number. Gold briefly rallied toward $4,450 on the data, then retreated.

At the time of writing, spot gold trades at $4,376 per ounce, down about $32 on the day, according to GoldSilver.com price data. The retreat reflects a straightforward calculation: services inflation and elevated energy costs mean the Fed has not yet received a clean all-clear.

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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 were pricing a roughly 54% probability of a Federal Reserve rate hike at the September meeting. Friday’s weaker-than-expected July payrolls data moved that to 46%. Wednesday’s in-line CPI reading pushed it further to approximately 40%.

Thursday’s soft PPI reinforced the same direction. The mechanism for gold is direct: lower rate-hike expectations compress real yields, and lower real yields reduce the opportunity cost of holding a non-yielding asset like gold. When the real yield on a Treasury falls, the argument for holding metal instead of bonds gets stronger. That is why gold responded immediately to both releases before pulling back as traders weighed the energy caveat. The September 17 FOMC meeting is now the next hard anchor for this trade.

Why Are Gold ETFs Attracting Institutional Money Again After Months of Outflows?

Gold exchange-traded funds recorded five consecutive sessions of net inflows through this week. SPDR Gold Shares attracted approximately $1.44 billion in the week ending August 7 alone. Global gold ETFs added roughly $3 billion in July, according to World Gold Council data, reversing two consecutive months of outflows.

The pattern suggests that the $6.4 billion in redemptions that cleared the market between May and June has worked through, and longer-duration buyers are stepping back in. Silver ETFs also attracted inflows during the same period. Spot silver trades at $64.78 per ounce today, with a gold-to-silver ratio near 67.6.

The long-run average since 1971 is approximately 60:1, which means silver is currently priced roughly 13% cheaper relative to gold than that historical baseline would suggest. For investors already holding gold, that relative discount is worth watching as institutional flows return.

What Is Behind Citi’s $90 Silver Price Target, and What Would It Take to Get There?

In a note to clients on Wednesday, Citi analysts reiterated a $75 per ounce target for silver over the next three months and a $90 per ounce target over the following six to twelve months, against a current spot price near $65. The bank’s thesis rests on three mechanisms.

First, investment demand is taking over from industrial demand as the primary price driver. Second, an eventual de-escalation in the Strait of Hormuz conflict would relieve energy-price pressure and weaken the dollar, both of which are currently headwinds for silver. Third, strong physical demand in India, reflected in a roughly 7% domestic premium above international spot, provides additional support heading into the fourth quarter wedding and festive season.

Citi also expects the global silver market to remain in deficit through 2027, driven by resilient demand from artificial intelligence infrastructure, 5G networks, and electric vehicles. The $90 target represents a 39% move from today’s price.

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 approximately 46.3 million ounces. Physical investment demand is forecast to rise 20% to 227 million ounces this year. Solar panel manufacturers reduced silver consumption by roughly 19% in 2026 through a process called thrifting, where engineers reduce the silver content per cell, yet the deficit is still widening.

The reason is that mine supply is contracting faster than industrial demand is falling. Total above-ground supply simply cannot keep up with total demand even after the reduction in solar intensity. At $64.78 per ounce today, silver sits more than 46% below its January 2026 all-time high of $121.62.

The deficit does not move prices automatically. What it does is establish a structural floor: as long as more silver is consumed than produced each year, the supply available to meet investment demand remains constrained. That constraint does not disappear when real yields rise or the dollar strengthens.

Gold Is Up 10% This Month. So Why Is It Still $1,200 Below Its Record?

Gold has risen approximately 10% in August, its best monthly performance since the January peak. That framing sounds more encouraging than the fuller picture warrants. At $4,376 per ounce, gold remains roughly $1,213 below the all-time high of $5,589.38 set on January 28, 2026, according to GoldSilver.com price data.

The $4,500 level, which roughly corresponds to the 200-day moving average, has not been tested yet, let alone cleared. For holders of physical metal, August’s move reflects the market correctly repricing two things at once: a Fed that looks increasingly unlikely to hike in September, and a geopolitical backdrop that, while slightly less acute following Iran-Oman talks about the Strait of Hormuz, has not resolved.

Both are real. Neither is a reason to declare the correction over. The structural case for physical gold, sovereign debt above $39 trillion and annual interest payments exceeding $1 trillion, remains entirely unaffected by one month’s price data in either direction.

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

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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