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*US headline PPI rose 0.4% month-on-month and 5.4% year-on-year, exceeding expectations.
*Markets increased the probability of a September Fed rate hike to around 70%.
*Markets now turn to the upcoming US CPI report for the final major inflation signal before the Fed meeting.
The US dollar rebounded after the latest Producer Price Index showed that inflationary pressures remained stronger than expected.
Headline PPI increased 0.4% month-on-month and 5.4% year-on-year, while core PPI rose 4.6% year-on-year. The stronger report increased expectations that the Federal Reserve may need to tighten monetary policy further.
Following the data, markets raised the probability of a September Fed rate hike to around 70%, compared with roughly 62% before the release. Higher rate expectations pushed Treasury yields higher and provided fresh support for the dollar.
Gold moved lower as rising yields and a stronger dollar reduced the appeal of non-yielding bullion. Although ongoing Middle East tensions continue to provide some safe-haven support, surging oil prices are also increasing inflation concerns and strengthening expectations for tighter Fed policy.
The next major catalyst will be the US CPI report. Hotter inflation could further support the dollar and pressure gold, while softer inflation could reduce Fed rate-hike expectations and provide room for bullion to rebound.

GOLD, H4:
Gold prices are trading lower, currently testing the 4,310.00 support level, which acts as a key near-term downside pivot.
Momentum indicators remain bearish, with the MACD showing increasing bearish momentum and the RSI at 38 staying below the midline, suggesting that selling pressure may persist if support fails to hold.
Market attention is focused on a potential breakdown below 4,310.00. A confirmed break could extend losses toward the next support level at 4,190.00, reinforcing the bearish structure.
However, if bearish momentum begins to fade, gold may stage a technical rebound and retest the downward trendline, with 4,445.00 acting as the key resistance level. Further upside could expose 4,575.00 if recovery momentum strengthens.
Resistance Levels: 4445.00, 4575.00
Support Levels: 4310.00, 4190.00
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