{"id":66037,"date":"2026-08-05T21:08:11","date_gmt":"2026-08-06T01:08:11","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/feds-daly-sees-path-to-lower-inflation-as-gold-surges-on-mideast-peace-hopes\/66037\/"},"modified":"2026-08-05T21:08:11","modified_gmt":"2026-08-06T01:08:11","slug":"feds-daly-sees-path-to-lower-inflation-as-gold-surges-on-mideast-peace-hopes","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/feds-daly-sees-path-to-lower-inflation-as-gold-surges-on-mideast-peace-hopes\/66037\/","title":{"rendered":"Fed\u2019s Daly Sees Path to Lower Inflation as Gold Surges on Mideast Peace Hopes"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>San Francisco Fed President Mary Daly<\/strong> signaled that supply-driven inflation is likely temporary, noting that a resolution to Middle East conflicts would significantly support a decline in price pressures.<\/li>\n<li><strong>Spot <a href=\"https:\/\/stockmarketwatch.com\/metal\/gold\" data-internallinksmanager029f6b8e52c=\"4\" title=\"gold price today\">gold prices<\/a> surged 1% to $4,285.76 per ounce<\/strong>, hitting new highs as markets reacted to potential de-escalation in the Middle East and a shifting outlook for global interest rates.<\/li>\n<li><strong>Fitch Ratings<\/strong> reported that the Japanese yen\u2019s weakness is not primarily due to U.S.-Japan interest rate differentials, but rather &quot;entrenched reflation&quot; and carry trade dynamics.<\/li>\n<li><strong>Japanese Government Bonds (JGBs)<\/strong> rose in early trading, closely tracking gains in <strong>U.S. Treasuries<\/strong> as global yields softened.<\/li>\n<\/ul>\n<p>San Francisco Federal Reserve President <strong>Mary Daly<\/strong> provided a cautiously optimistic outlook on inflation Thursday, stating that there are clear reasons to expect current supply shocks will not lead to persistent long-term inflation. Speaking on the economic landscape, Daly noted that while <strong>tariffs<\/strong> have had a &quot;measurable effect&quot; on consumer prices, there is emerging evidence that this impact is beginning to diminish. She emphasized that many market participants expect the current inflationary spike caused by supply disruptions to be a temporary phenomenon rather than a structural shift.<\/p>\n<p>A critical component of the Fed\u2019s outlook remains the geopolitical situation in the Middle East. Daly stated that the conclusion of the regional conflict would likely act as a major tailwind for disinflation, helping to stabilize energy costs and global supply chains. This sentiment was echoed in the commodities market, where <strong>Gold<\/strong> (<a href=\"\/stock\/GC=F\">GC=F<\/a>) gained 1% to reach <strong>$4,285.76 per ounce<\/strong>. Investors are increasingly rethinking their interest rate views, weighing the possibility of a &quot;soft landing&quot; if geopolitical tensions continue to ease.<\/p>\n<p>In the currency and bond markets, <strong>Fitch Ratings<\/strong> issued a new assessment of the <strong>Japanese yen<\/strong> (<a href=\"\/stock\/USDJPY\">USDJPY<\/a>). The agency noted that the yen&#39;s historic weakness does not stem primarily from the relative monetary policy positions of the <strong>Federal Reserve<\/strong> and the <strong>Bank of Japan (BOJ)<\/strong>. Instead, Fitch pointed to Japan&#39;s entrenched reflation and very low real interest rates as the primary drivers. The ratings agency suggested that any meaningful recovery in the yen will likely depend on the <strong>BOJ<\/strong> implementing additional rate increases beyond current market expectations.<\/p>\n<p>Meanwhile, fixed-income markets showed increased synchronization between major economies. <strong>Japanese Government Bonds (JGBs)<\/strong> rose during the session, tracking a similar rally in <strong>U.S. Treasuries<\/strong>. This move suggests that investors are seeking the safety of sovereign debt as they navigate a complex mix of cooling inflation data and shifting central bank rhetoric. Market participants remain focused on whether the <strong>BOJ<\/strong> will follow through with hawkish signals to support the currency or if the <strong>Fed<\/strong> will begin a more aggressive easing cycle as supply-side pressures fade.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways San Francisco Fed President Mary Daly signaled that supply-driven inflation is likely temporary, noting that a resolution to 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