Gold Stalls Below Key Levels as Strong US Inflation Data Limits Fed Cut Hopes
Gold prices ticked slightly higher on Friday, underpinned by a weaker dollar, but remained stuck below key technical resistance, keeping the yellow metal on track for a weekly loss. Traders are weighing stronger-than-expected U.S. producer price data and solid jobless claims against cooling consumer prices, creating uncertainty around the Federal Reserve’s next policy move.
At 12:22 GMT, XAU/USD is trading $3338.72, up $3.130 or +0.09%.
Hotter US Inflation Data Shifts Fed Rate Cut Expectations
Thursday’s U.S. Producer Price Index jumped 0.9% in July — the largest monthly gain in three years — far above the 0.2% estimate. This surprise reading, alongside weekly jobless claims falling to 224,000 (vs. forecast of 228,000), pushed back expectations for a more aggressive September rate cut. CME’s FedWatch Tool now shows a 93% probability of a 25-basis-point cut, but any hopes for a larger 50-bp move have evaporated.
Gold typically benefits from lower interest rates, as it reduces the opportunity cost of holding the non-yielding asset. However, Thursday’s PPI data has temporarily cooled enthusiasm for aggressive easing, capping gold’s upside.
Dollar Slips But Support Levels Remain Intact
The U.S. dollar softened slightly on Friday ahead of import price and retail sales data, giving gold brief support. But the upside remains limited as traders await additional signals from next week’s Jackson Hole symposium. A stronger yen — up 0.4% to 147.20 — and the euro gaining 0.25% to $1.1675, added pressure on the dollar. Still, gold hasn’t broken above its 50-day moving average at $3349.20 or the short-term pivot at $3353.58, keeping the early downside bias intact.
Technically, gold continues to hold this week’s low at $3331.17. A decisive break below this level could trigger further selling, opening the door to a long-term pivot at $3310.48. A breakdown there would likely accelerate losses toward $3268.12.
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See all Gold forecastsGeopolitical Watch: Trump-Putin Meeting in Focus
Traders are also monitoring Friday’s scheduled meeting between U.S. President Trump and Russian President Putin in Alaska. While any significant outcome remains uncertain, markets are on alert for potential developments around Ukraine that could impact broader risk sentiment and the dollar, indirectly influencing gold prices.
Gold Prices Forecast: Cautious Outlook with Bearish Risk
With strong U.S. producer price data dampening Fed cut expectations and gold still trading below key resistance levels, the near-term outlook leans bearish. A sustained move above $3353.58 would be needed to neutralize the selling pressure and target $3374.81 and $3409.43. Until then, downside risks dominate, especially if $3331.17 fails to hold.
Support at $3310.48 is crucial — a break below may lead to deeper losses. Traders remain focused on upcoming U.S. data and Jackson Hole remarks for the next catalyst in gold price direction.
More Information in our Economic Calendar.
