Gold News: Gold Prices Steady as Traders Brace for PPI-Driven Market Reaction

Gold Prices Steady Near All-Time Highs as Traders Eye Fed Rate Cut and Inflation Data

At 11:52 GMT, XAU/USD is trading $3650.54, up $24.23 or + 0.67%.

Fed Rate Cut Expectations Supporting Gold Rally

Gold has been buoyed by growing expectations of a U.S. interest rate cut in September, with markets pricing in a 92% probability of a 25-basis-point reduction, according to CME Group’s FedWatch Tool. Weaker U.S. labor market data last week, including disappointing nonfarm payrolls and downward revisions to prior job growth estimates, have added pressure on the Fed to ease policy. The U.S. Labor Department revealed on Tuesday that job growth from March 2023 to March 2024 was overestimated by 911,000 positions.

These signs of economic fragility, combined with a softer U.S. dollar, have underpinned gold’s appeal as a safe-haven asset. Independent analyst Ross Norman noted that “such out-of-left-field economic shifts underscore the role of gold as a safe-haven asset,” as uncertainty builds ahead of key inflation data.

Traders Await Key U.S. Inflation Prints

The August U.S. Producer Price Index (PPI), due later Wednesday, is forecast to rise 3.3% year-over-year, matching July’s pace. However, it’s Thursday’s Consumer Price Index (CPI) data that traders expect to be more influential for the Fed’s rate decision. Any upside surprise in CPI could temper rate-cut bets, weighing on gold in the short term. Until then, non-yielding gold remains well supported in a low-rate environment.

Technical Levels in Focus as Bulls Defend Value Areas

Gold’s price action presents a clear technical setup. A break above $3674.70 with strong volume would confirm bullish continuation, potentially targeting $3879.64. On the downside, a move below the minor pivot at $3593.22 could trigger a deeper pullback toward a major support cluster between $3500.20 and $3493.13. Buyers are expected to step in at these value zones, particularly while the price stays above the 50-day moving average at $3389.40. The “buy-the-dip” approach remains valid under this technical structure.

Gold Prices Forecast: Bullish Bias Intact with Key Data Ahead

Despite Tuesday’s technical pullback, the broader outlook remains bullish. Gold’s strength is underpinned by dovish Fed expectations, a weakening labor market, and safe-haven flows. As long as support holds near $3500 and the Fed stays on course for easing, gold remains poised to retest and possibly breach recent highs. With ANZ projecting a year-end target of $3800 and a peak near $4000 by June, dips continue to present opportunities for upside reentry.

More Information in our Economic Calendar.