Gold price sheds modest intraday gains, holds near one-week low ahead of US CPI data

Gold (XAU/USD) struggled to maintain its early gains on Tuesday, slipping back below $3,350 during the European session and hovering close to Monday’s one-week low. Risk sentiment remained buoyant, supported by optimism over an extended US–China tariff truce and the upcoming US–Russia summit aimed at ending the war in Ukraine—factors that reduced immediate demand for traditional safe havens.

Even so, downside pressure on gold was cushioned by the market’s growing conviction that the Federal Reserve will resume its rate-cutting cycle in September. This expectation has limited the US Dollar’s ability to extend its recent two-day rebound and offered mild support to the non-yielding metal. Traders are also likely to remain on the sidelines until the release of the US Consumer Price Index (CPI), which could provide further clues about the Fed’s policy path.

Market drivers recap: Gold traders stay cautious amid optimistic risk mood

Monday saw a sharp sell-off in gold as fading geopolitical tensions weighed on safe-haven assets. Optimism that Friday’s planned US–Russia summit could pave the way for a resolution in Ukraine helped fuel the move. Continued US Dollar buying added to the pressure, pushing gold down roughly 1.65% overnight.

Still, markets are pricing in a near-unanimous probability of a 25-basis-point Fed rate cut in September, alongside expectations for at least two more cuts before year-end. Weak US economic releases, including a disappointing Nonfarm Payrolls report, have reinforced these views. While this has dampened the Dollar’s upside momentum, it has not sparked aggressive gold buying ahead of this week’s US CPI release.

Beyond inflation data, traders will also be watching Thursday’s US Producer Price Index (PPI) and Friday’s retail sales figures and University of Michigan Consumer Sentiment Index. Speeches from key Federal Open Market Committee (FOMC) members are expected to influence near-term USD price action and could provide fresh directional cues for XAU/USD.

On the trade policy front, US President Donald Trump signed an executive order on Monday extending the tariff truce with China by three months, easing fears of a renewed trade war between the two largest economies. Earlier, Trump posted on social media that gold would not be subject to tariffs, though he offered no further details.

Technical outlook: Key SMA support at risk

Technically, gold has so far managed to defend the 200-period Simple Moving Average (SMA) on the 4-hour chart, currently holding near the $3,344–$3,342 zone. However, with momentum oscillators trending lower, a decisive break beneath this area could trigger further downside toward $3,315, followed by the $3,300 round figure. Sustained selling could expose the $3,268 region, marking a deeper near-term correction.

On the upside, immediate resistance sits at $3,358–$3,360, with stronger resistance at $3,380. A firm break above $3,400 could negate the current bearish bias and pave the way toward $3,409–$3,410, and further to $3,422–$3,423. Above this, the $3,434–$3,435 zone would be the final hurdle before a potential retest of the all-time high near the $3,500 psychological mark reached in April.