Gold slips as traders book profits despite increasing Fed dovish bets

Gold price trimmed some of its earlier losses on Thursday, yet it remains negative in the day, down over 0.14% as the latest print of consumer inflation was aligned with estimates. Nevertheless, jobs data outweighed August’s Consumer Price Index (CPI) report as the number of Americans filing for unemployment benefits rose. XAU/USD trades at $3,635 after hitting a daily high of $3,649.

Bullion edges lower after soft CPI and higher Jobless Claims boost easing odds

The US Bureau of Labor Statistics (BLS) revealed that inflation remained steady on the consumer side, with headline CPI standing below the 3% threshold. At the same time, the release of Initial Jobless Claims for the week ending September 6 rose to its highest level in almost four years. This cemented the case for a rate cut by the Federal Reserve (Fed) next week, the first one since December of last year.

Now with the CPI and the Producer Price Index (PPI) reports in the rearview mirror, money markets had priced in a 90% chance for a 25-basis points (bps) cut. Meanwhile, odds for a 50-bps cut are slim at 10%, according to the Prime Market Terminal interest rate probabilities tool

Even though this is bullish for Gold, it seems that traders are booking profits as the non-yielding metal has failed to gain traction, despite falling US Treasury yields and broad US Dollar weakness.

In the meantime, geopolitics would likely continue to boost Gold’s appeal after Poland attacked Russian drones over its airspace, which marks the first direct engagement on NATO countries after Russia’s invasion of Ukraine.

Daily market movers: Gold edges up as US inflation ticks lower

• The US CPI in August increased from 2.7% to 2.9% YoY, as expected by estimates. Meanwhile, the Core CPI print remained steady at 3.1% YoY, aligned with projections and unchanged from July’s figures. Market’s reaction was muted, as Fed odds for rate cuts remained unchanged.
• Initial Jobless Claims for the week ending September 6 surged from 237K in the previous print to 263K, crushing forecasts of 235K.
• Following the Fed Chair Powell's speech at Jackson Hole, when he addressed that they would prioritize maximum employment over inflation, suggests that next week’s cut is fully priced in.
• Gold price rally is poised to continue rising, up so far 38.52% in year-to-date figure, as US President Donald Trump cut taxes, escalated the trade war and posed threats to the Fed’s independence.
• The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is down 0.22% at 97.59.
• US Treasury yields are falling, with the 10-year Treasury note down two and a half basis points (bps) to 4.019%. US real yields—calculated by subtracting inflation expectations from the nominal yield—have decreased nearly three basis points to 1.669% at the time of writing.
• The Bureau of Labor Statistics (BLS) revised down its annual benchmark payrolls to -911K for the 12 months through March 2025, exceeding economists’ estimates of -682K, according to Bloomberg.

Technical outlook: Gold price hovers below $3,640

Gold price consolidates for the third straight day, after reaching an all-time high (ATH) of $3,674 on Tuesday. The Relative Strength Index (RSI) begins to show overbought conditions, capping Bullion’s uptrend.

If XAU/USD clears $3,650, expect a move towards the ATH ahead of $3,700. If surpassed, the next stop would be $3,750 ahead of $3,800. Conversely, if Gold tumbles below $3,600, the first support would be $3,550, followed by the April 22 high of $3,500.