📊 Gold declines as U.S. inflation rises

Gold (XAU) prices declined by 0.57% on Tuesday, falling for the second trading session in a row, as investors digested a notable rise in U.S. inflation.

👉 Possible effects for traders

The Consumer Price Index (CPI) report showed that inflation in June accelerated at its fastest pace in five months. CPI rose to 2.7% year-on-year, up from May's 2.4% increase, aligning with the forecast. This acceleration suggests that U.S. President Donald Trump's tariffs may be filtering through to consumer prices.

The rise in inflation adds complexity to the Federal Reserve's (Fed) cautious stance on rate cuts amid concerns about potential inflationary pressures. While Trump has publicly called for immediate rate cuts to support the economy, Fed officials have signalled a more cautious approach, emphasising that rising inflation could limit the scope for easing. U.S. economic data paints a mixed backdrop for gold. Bullion typically benefits from a low-interest-rate environment. However, sustained inflation may reduce the likelihood of significant rate cuts, weakening demand for non-yielding assets like gold.

XAUUSD started to rise during the Asian and early European trading sessions. Markets now focus on today's Producer Price Index report at 12:30 p.m. UTC. The data could provide further insight into the inflation pace and its potential impact on the Fed's policy trajectory. A higher-than-expected PPI could intensify concerns over tariff-induced price pressures, reinforcing the Fed's cautious stance. Meanwhile, a softer reading may revive hopes for near-term rate cuts and support gold.

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📊 JPY weakens as economic data sparks recession fears

USDJPY rose towards 148.7 during the Asian and early European sessions as weaker-than-expected trade balance data raised concerns about a potential technical recession. The latest figures showed Japan's trade surplus narrowing sharply to ¥153.1 billion in June, down from ¥221.3 billion a year earlier and well below the expected ¥353.9 billion. The disappointing data underscored deeper trade imbalances.

👉 Possible effects for traders

Exports fell by 0.5% year-on-year to ¥9,162 billion, marking the second consecutive monthly decline and missing forecasts for a modest 0.5% gain. The decline was largely driven by ongoing pressure from the U.S. tariff campaign. The data heightened fears that Japan's economy could contract again in Q2 and slip into a technical recession if domestic demand fails to offset trade weakness.

In contrast, imports unexpectedly rose by 0.2% to ¥9,009 billion, marking the first increase in three months and outperforming expectations for a 1.6% decline. The rise in import demand indicates some underlying domestic resilience, although it adds to the pressure on the trade balance, weighing further on JPY sentiment.

Amid the weakening trade outlook, investors are watching closely for potential fiscal measures ahead of Japan's Upper House election on 20 July. Speculation is rising over possible new government spending initiatives and a cut in the consumption tax to stimulate economic growth. Also, markets are looking for signals on the government's response to recession risks.

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📊 U.S. bills support BTCUSD

Bitcoin (BTC) climbed to $119,200 on Thursday after the U.S. House of Representatives passed three key bills regulating digital assets.

👉 Possible effects for traders

The new legislation includes the CLARITY Act, aimed at establishing a clear market structure for cryptocurrencies; the GENIUS Act, focused on setting national standards for stablecoins; and the Anti-CBDC Surveillance State Act, intended to prevent government surveillance via central bank digital currencies. These initiatives reflect a growing political consensus on the need to establish a legal framework for the crypto industry while simultaneously addressing security and transparency issues.

U.S. President Donald Trump plans to issue an executive order allowing cryptocurrencies, gold, private equity, and other alternative investments to be included in retirement funds such as 401(k)s. This initiative aims to expand the range of available assets for long-term investors. It also reflects increasing interest from regulators and lawmakers in integrating digital and alternative assets into traditional retirement portfolios.If implemented, regulators would have to review existing barriers that currently restrict access to alternative investments in professionally managed retirement accounts.

BTCUSD continued to rise during the Asian and early European trading sessions. Today, traders are focusing on the University of Michigan (UoM) Consumer Sentiment data, due at 2:00 p.m. UTC. The report could offer insights into potential shifts in U.S. monetary policy and spur market volatility. Key levels to watch are support at $116,000 and resistance at $121,000.

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