Gold prices eased on Thursday as investors booked profits, even as weaker US data and rising expectations for Federal Reserve (Fed) easing supported the broader bullish outlook. XAU/USD was last down 0.14% at $3,635, after touching a daily high of $3,649.
US data cements case for September rate cut
The Bureau of Labor Statistics (BLS) reported that consumer inflation remained stable in August, with headline CPI holding below 3% and Core CPI steady at 3.1% year-on-year. The muted inflation report was overshadowed by labor market data, as Initial Jobless Claims rose to 263,000 in the week ending September 6—the highest level in nearly four years.
The jump in claims strengthened expectations that the Fed will cut rates by 25 basis points next week, marking its first reduction since December. According to money market pricing, the probability of a quarter-point cut stands at 90%, while odds of a larger 50-basis-point move remain limited at 10%.
Despite the dovish implications for monetary policy, gold has struggled to capitalize on lower yields and a softer US Dollar, as profit-taking kept gains in check.
Geopolitical risks provide safe-haven support
Beyond US economic data, geopolitical tensions are underpinning demand for safe-haven assets. Poland confirmed it had intercepted Russian drones over its airspace, marking the first direct engagement by a NATO member since the start of Russia’s invasion of Ukraine. The development is likely to maintain a floor under gold prices even as traders lock in short-term profits.
Daily market movers
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Headline CPI rose 2.9% YoY in August, in line with expectations, while Core CPI held steady at 3.1%.
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Initial Jobless Claims surged to 263K, far exceeding forecasts of 235K and up from 237K previously.
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Fed Chair Jerome Powell’s Jackson Hole remarks emphasized prioritizing maximum employment, reinforcing expectations for easing.
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Year-to-date, gold remains up 38.52%, supported by a combination of Fed policy shifts, trade tensions, and US tax cuts.
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The US Dollar Index (DXY) slipped 0.22% to 97.59, while the 10-year Treasury yield fell 2.5 basis points to 4.019%.
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Real yields declined nearly 3 basis points to 1.669%.
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The BLS revised down its annual payroll benchmark by -911K for the 12 months through March 2025, worse than economists’ estimates of -682K.
Technical outlook: gold consolidates below $3,640
Gold is consolidating for a third consecutive session after touching a record high of $3,674 earlier in the week. The Relative Strength Index (RSI) is flashing overbought signals, suggesting limited room for immediate upside.
A break above $3,650 could pave the way for a retest of the $3,674 all-time high, with further upside targets at $3,700 and $3,750. On the downside, support lies at $3,600, followed by $3,550 and the April 22 peak of $3,500.
