Gold remained steady near $3,650 on Wednesday, holding close to Tuesday’s all-time high of around $3,675. Softer-than-expected US Producer Price Index (PPI) data bolstered bets on a potential Federal Reserve (Fed) rate cut next week, although the figures offered limited justification for a larger easing. At the time of writing, XAU/USD is trading around $3,655, up roughly 0.8% on the day.
US PPI misses expectations
The US PPI for August fell 0.1% month-on-month, below forecasts of a 0.3% increase and after July’s reading was revised down to 0.7% from 0.9%. On an annual basis, headline inflation eased to 2.6% YoY, under the 3.3% forecast. Core PPI, which excludes food and energy, also slipped 0.1% MoM versus an expected 0.3% gain, while the yearly rate slowed to 2.8% from 3.7%.
Thursday’s Consumer Price Index (CPI) release will serve as the final inflation checkpoint ahead of the Fed’s monetary policy meeting, providing critical guidance for expectations regarding the pace of easing beyond September.
Gold supported by weak USD and geopolitical risks
Gold continues to benefit from a combination of factors. A softer US dollar (USD) enhances the appeal of precious metals for international buyers. Central banks remain active in gold purchases, reinforcing the metal’s role as a strategic asset. Persistent geopolitical tensions and trade frictions, particularly those linked to US tariffs, are further increasing demand for safe-haven assets. Uncertainty over the Fed’s independence amid rising political pressure is also keeping investors cautious and gold prices near historic highs.
Market movers: focus on inflation cues
The US Dollar Index (DXY), measuring the greenback against six major currencies, struggles to sustain a rebound from seven-week lows, trading near 97.60. Treasury yields remain stable across the curve, with the 10-year note around 4.091%, the 30-year at 4.747%, and the 2-year near 3.548%.
Geopolitical risks remain elevated after Israel’s airstrike on Hamas leaders in Doha and Poland intercepting Russian drones over its airspace during Ukraine’s ongoing conflict. Meanwhile, US Supreme Court plans an expedited hearing in November regarding President Trump’s tariff authority, and a federal judge blocked the removal of Fed Governor Lisa Cook, allowing her to vote at next week’s FOMC meeting.
Technical analysis: XAU/USD eyes new highs
XAU/USD continues to display a strong bullish structure on the 4-hour chart, forming higher highs and higher lows since bottoming near $3,300 in late August. Immediate support levels are $3,617 (21-period SMA) and $3,556 (50-period SMA). Momentum indicators remain aligned with the bullish trend, with RSI holding above 73 and ADX above 54, signaling persistent buying pressure.
As long as gold remains above $3,600, the path of least resistance points higher, with potential for a fresh run toward new all-time highs above $3,675.
