Gold News: Gold Market Braces for CPI Shock as Rate Cut Hopes Intensify

Gold Prices Rebound as Jobs Data Revives Rate Cut Hopes, CPI in Focus

Gold (XAU/USD) settled at $3,362.90 last week, posting a $25.83 gain or +0.77%, as weaker U.S. employment data boosted expectations for Federal Reserve rate cuts. The yellow metal rallied nearly 2% on Friday, reversing midweek losses and ending a three-week slide, with traders now shifting focus to this Thursday’s CPI report for the next directional cue.

Fed Holds Steady, but Powell Offers No Guidance

The Federal Reserve kept its benchmark rate unchanged at 4.25%–4.50% and gave no firm indication of a September move. Chair Jerome Powell emphasized a wait-and-see approach, citing ongoing inflation risks, especially from newly reinstated tariffs. Despite two dissenting votes in favor of a cut, the overall message was that policy remains data-driven.

Disappointing Jobs Report Triggers Dovish Repricing

Friday’s July nonfarm payrolls report was the catalyst for gold’s rebound. The U.S. economy added only 73,000 jobs, well below the 110,000 consensus. June and May figures were also revised sharply lower. The unemployment rate ticked up to 4.2%, and Treasury yields plunged in response—most notably the 2-year, which dropped 27 basis points to 3.68%. Rate futures now price in 63 basis points of easing by year-end, with the first cut expected in September.

Tariffs, Dollar Weakness Underpin Safe-Haven Demand

Tariff headlines added further support. President Trump reinstated sweeping import levies, raising concerns over inflation and global trade. While this complicates the Fed’s inflation mandate, it also increases safe-haven demand. The U.S. Dollar Index dropped 1.2% Friday, its largest daily loss since January 2023, helping lift gold as dollar-denominated assets became more attractive to foreign buyers.

Gold Prices Forecast: Bullish Bias If CPI Cools

This week’s U.S. CPI report (due Tuesday) is the key event. A soft core print (expected at +0.3% m/m, +3.0% y/y) could cement the case for a September cut, triggering further upside in gold. A stronger-than-expected CPI, however, would reinforce Powell’s caution and likely stall the rally.

The market continues to coil inside a tight range bounded by $3500.20 to $3120.76 and $3451.53 to $3244.41. The price action suggests investor indecision and impending volatility. The key pivot is $3310.48. Trader reaction to the pivot will set the tone for the week.

Outlook: Bullish near term, contingent on CPI. Rate cut bets have returned, and unless inflation runs hot, gold is positioned to test higher ground.

More Information in our Economic Calendar.