Gold (XAUUSD) Price Forecast: Can PPI Data Confirm Bullish Gold Breakout at $3403.63?

Gold Eyes Breakout as Rate Cut Bets Build, Traders Watch PPI and Geopolitical Tensions

Gold prices climbed to a one-week high on Thursday, propelled by softer U.S. inflation data and increasing speculation that the Federal Reserve will begin cutting rates this year. XAU/USD is trading near $3400, approaching the June 5 high at $3403.63. A break above this level would confirm a continuation of the uptrend and put the May 6 high at $3435.06 in play.

At 11:09 GMT, XAU/USD is trading $3386.07, up $30.82 or +0.92%

Fed Rate Cut Expectations Boost Gold Prices Forecast

Wednesday’s U.S. Consumer Price Index (CPI) showed inflation rose just 0.1% in May, below the 0.2% forecast. On a year-over-year basis, CPI increased 2.5%. The softer-than-expected data pushed the dollar index (DXY) down 0.3% to a two-month low, making gold more attractive to foreign buyers.

Markets are now pricing in at least 50 basis points of rate cuts this year, with traders assigning a 68% probability of a cut by September. Declining Treasury yields added fuel to gold’s rally, with the 10-year yield falling to 4.387% and the 2-year at 3.926%. Lower yields reduce the opportunity cost of holding non-yielding assets like gold.

Geopolitical Risk and Trade Tensions Add Safe-Haven Appeal

Geopolitical risk remains a supportive factor. U.S. President Donald Trump said U.S. personnel were being repositioned in the Middle East due to growing tensions with Iran, reaffirming that Iran would not be allowed to develop nuclear weapons. In parallel, U.S.-China trade negotiations made headlines after Trump confirmed a finalized deal that includes China supplying rare earth materials and the U.S. easing restrictions on Chinese students.

The trade agreement helped stabilize market sentiment, but underlying risks remain. Comments from Goldman Sachs suggested that if inflation remains subdued or the job market weakens, the Fed may be forced to ease monetary policy sooner than planned.

All Eyes on PPI as Gold Tests $3400 Barrier

Traders now await U.S. Producer Price Index (PPI) data for confirmation of disinflation trends. A weaker-than-expected print could reinforce bets on Fed easing and push gold through key resistance.

Gold Price Outlook: Bullish Momentum Strengthens

Gold is on the verge of confirming a breakout above $3403.63. If the June 5 high is cleared, the May 6 peak at $3435.06 becomes the next target. Immediate support lies at $3310.48, with major support at the 50-day moving average near $3279.30.

Unless PPI data or Fed signals reverse current sentiment, the path of least resistance remains to the upside. The gold prices forecast is bullish, supported by falling yields, dollar weakness, and persistent geopolitical risk.

More Information in our Economic Calendar.