Gold Price Awaiting US Macro Data for Potential Gains

Gold prices (XAU/USD) saw a decline on Wednesday as investors adjusted their expectations for the Federal Reserve’s (Fed) policy after the release of US consumer inflation data. However, persistent geopolitical tensions in the Middle East, expectations of the Fed initiating a rate-cutting cycle soon, and a subdued US Dollar (USD) helped gold regain positive momentum on Thursday.

Despite reduced expectations for a 50 basis point (bps) Fed rate cut in September leading to a modest recovery in US Treasury yields, which could limit aggressive bullish positioning on non-yielding gold, the overall market environment still supports the potential for further gains. Additionally, a generally positive tone in equity markets could pose a challenge to the safe-haven metal. Nonetheless, the fundamental backdrop remains favorable for gold ahead of key US macroeconomic data scheduled for release later on Thursday.

Market Movers: Gold Price Supported by Geopolitical Risk and Weak USD Demand

On Wednesday, data showed that US consumer prices increased as expected in July, dampening hopes for a significant rate cut by the Fed in September. The US Bureau of Labor Statistics (BLS) reported a moderate 0.2% rise in headline CPI for July, following a 0.1% decline the previous month. The annual CPI increase fell below 3% for the first time in nearly three and a half years, indicating ongoing progress toward the Fed’s inflation targets.

Core CPI, excluding volatile food and energy prices, also increased by 0.2% in July, easing to 3.2% year-on-year from 3.3% in June. As a result, the CME Group’s FedWatch Tool now shows a 36% probability of a 50 bps rate cut at the next Federal Open Market Committee (FOMC) meeting, down from 50% before the CPI data. This led to a late recovery in US Treasury yields, which attracted some buying interest in the USD and weighed on gold.

Despite this, ongoing geopolitical tensions provide some support for gold. Mediators are aiming to initiate ceasefire talks between Israel and Hamas amid the potential threat of an imminent Iranian attack on Israel.

Traders are now focusing on upcoming US economic reports, including Retail Sales, Weekly Initial Jobless Claims, and regional manufacturing indices, for short-term trading opportunities.

Technical Outlook: Gold Price Poised for Further Gains Above $2,470 Resistance

Technically, the recent swing low around the $2,438 level is acting as immediate support, followed by the $2,424 area, which was the weekly low on Monday. Continued selling pressure could push gold below the $2,400 mark, targeting the 50-day Simple Moving Average (SMA) near the $2,380 zone. A decisive break below this level could expose the 100-day SMA near the $2,360 region, potentially triggering further bearish momentum.

However, daily chart oscillators remain in positive territory, indicating potential for additional near-term gains. Any further upward movement is likely to encounter resistance around the $2,471-$2,472 region, followed by the $2,483-$2,484 area, which marks the all-time high reached in July. A sustained rise beyond the $2,500 psychological mark would confirm a breakout from the one-month-old trading range and set the stage for further appreciation.