Gold (XAU/USD) faced mild selling pressure in Asian trading on Thursday, retracing part of the prior session’s gains. The retreat was driven by upbeat sentiment across global equities and a modest uptick in the US Dollar (USD), which together limited demand for the safe-haven metal. That said, expectations of a Federal Reserve (Fed) rate cut next week continue to cushion the downside and support the non-yielding asset.
Broader uncertainties—ranging from trade tensions to heightened geopolitical risks and political instability in France and Japan—are also seen as factors that could cap losses. With traders awaiting the US Consumer Price Index (CPI) release for clues on the Fed’s policy path, market participants appear cautious about extending this week’s pullback from record highs.
Market Movers: Gold bulls cautious ahead of CPI and Fed
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Equity strength weighs on Gold: The S&P 500 and Nasdaq closed at record highs on Wednesday, while Japan’s Nikkei 225 surged over 1% to a fresh peak on Thursday. The rally in risk assets dampened safe-haven demand.
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US PPI softens: Data from the Bureau of Labor Statistics showed headline PPI eased to 2.6% YoY in August (down from 3.3%), while Core PPI slowed to 2.8% from 3.7% in July. The cooling producer prices highlight softer domestic demand, reinforcing bets on Fed easing.
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Fed expectations: Markets now assign a high probability of a 25 bps cut at next week’s meeting, with a smaller chance of a 50 bps move. Traders also anticipate three additional 25 bps cuts by year-end, which should cap any sustained USD recovery and keep Gold supported.
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Geopolitical backdrop: US President Donald Trump has urged the EU to impose 100% tariffs on China and India, linking the move to pressure on Russia over Ukraine. Meanwhile, Poland intercepted Russian drones that violated its airspace—marking the first military response by a NATO member in the conflict—fueling concerns of escalation. Trump also threatened tougher sanctions after Russia’s heaviest aerial assault on Ukraine, which further enhances Gold’s safe-haven appeal.
Technical Outlook: Overbought conditions hint at consolidation
The daily Relative Strength Index (RSI) remains in overbought territory, signaling potential consolidation or deeper correction. Immediate support is seen at $3,620, with the $3,600 round figure acting as a stronger floor. A decisive break below $3,580 could open the door to $3,565–$3,560, with further weakness exposing $3,510.
On the upside, resistance emerges at $3,649 and $3,657–$3,658. A move above could see Gold retesting the all-time high near $3,675. Sustained buying momentum beyond that zone may allow the metal to target the $3,700 threshold, though the level is expected to act as a firm near-term barrier.
