Gold price bulls seem non-committed; US CPI eyed for Fed rate cut cuts

08/12/2025 08:24:00 GMT|ByHaresh Menghani

Gold price regains positive traction following the overnight slump to a one-week trough.
Rising Fed rate cut bets cap the recent USD move up and offer support to the commodity.
A positive risk tone warrants caution for the XAU/USD bulls ahead of the US inflation data.

Gold price (XAU/USD) sticks to modest intraday gains through the first half of the European session on Tuesday, though it lacks bullish conviction as traders opt to wait for the release of the US consumer inflation figures. The crucial data will play a key role in influencing expectations about the Federal Reserve's (Fed) rate-cut path, which, in turn, will drive the US Dollar (USD) and provide some meaningful impetus to the non-yielding yellow metal.

Heading into the key data risk, the growing acceptance that the US central bank will lower borrowing costs in September keeps the USD bulls on the defensive and acts as a tailwind for the Gold price. However, the latest optimism over an extension of the US-China trade truce and the US-Russia summit aimed at ending the war in Ukraine caps the safe-haven XAU/USD pair and warrants some caution before positioning for any further appreciating move.

Daily Digest Market Movers: Gold price traders await US inflation data before placing directional bets

Gold price fell sharply on Monday as easing geopolitical tensions weighed heavily on traditional safe-haven assets. Investors remain hopeful that the upcoming US-Russian summit on Friday will increase the chances of ending the prolonged war in Ukraine. Furthermore, some follow-through US Dollar buying contributed to the precious metal's overnight slump of around 1.65%.
Traders are overwhelmingly betting that the US Federal Reserve will lower borrowing costs by 25 basis points in September and deliver at least two rate cuts by the end of this year. The expectations were lifted by a series of disappointing US economic data released recently, including the closely watched Nonfarm Payrolls report, which signaled that the economy could be weakening.
This, in turn, fails to assist the USD to build on a two-day-old positive move and helps revive demand for the non-yielding yellow metal during the Asian session on Tuesday. Traders, however, might refrain from placing aggressive directional bets and opt to move to the sidelines ahead of the US consumer inflation figures, which could provide more cues about the interest-rate outlook.
Traders this week will also confront the release of the US Producer Price Index (PPI) on Thursday, along with US monthly Retail Sales data and Michigan Consumer Sentiment Index on Friday. Apart from this, speeches from a slew of influential FOMC members will play a key role in driving the near-term USD price dynamics and provide some meaningful impetus to the XAU/USD pair.
On the trade-related front, US President Donald Trump signed an executive order on Monday extending a trade truce with China for another three months, easing market concerns about a trade war between the world's two largest economies. Earlier, Trump posted on his social media account, saying that gold would not be subject to tariffs, though he fell short of offering any further details.

Gold price defends 200-SMA pivotal support on H4; upside potential seems limited

From a technical perspective, the XAU/USD pair manages to defend the 200-period Simple Moving Average (SMA) pivotal support on the 4-hour chart, currently pegged near the $3,344-3,342 region. Given that oscillators on the said chart have been gaining negative traction, a convincing break below could drag the Gold price to the $3,315 intermediate support en route to the $3,300 round figure. Some follow-through selling will be seen as a fresh trigger for bearish traders and pave the way for a further near-term depreciating move.

On the flip side, any subsequent strength beyond the $3,358-3,360 region is likely to confront a stiff hurdle near the $3,380 area. A sustained move above should allow the Gold price to make a fresh attempt to conquer the $3,400 mark. Some follow-through buying beyond last week's swing high, around the $3,409-3,410 area, would negate the negative outlook and lift the XAU/USD pair to the next relevant hurdle near the $3,422-3,423 area. The momentum could extend further towards the $3,434-3,435 strong horizontal barrier, which, if cleared decisively, might expose the all-time peak, around the $3,500 psychological mark touched in April.

Economic Indicator

Consumer Price Index ex Food & Energy (YoY)

Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

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