Gold prices remained resilient, holding above the $2,500 mark on Tuesday, as market participants braced for key U.S. inflation data, which could provide further clarity on the Federal Reserve’s potential interest rate cuts next week.
Two major events loom on the horizon: the August U.S. Consumer Price Index (CPI) report and the first presidential debate between Vice President Kamala Harris and former President Donald Trump. Both events have the potential to drive market sentiment and influence gold prices.
The dollar has pared some of its earlier gains, providing a tailwind for gold, while U.S. Treasury yields have edged lower in anticipation of the inflation data. Traders are positioning themselves for Wednesday’s CPI reading, which is expected to rise by 0.2% month-over-month, mirroring July’s increase, according to a Reuters poll. Thursday’s Producer Price Index (PPI) data will also be closely watched.
The latest U.S. jobs report showed fewer-than-expected job additions, although the unemployment rate ticked down, offering some relief to Fed policymakers. Despite concerns over the labor market, the likelihood of a 25-basis-point rate cut at the Federal Reserve’s September 17-18 meeting is currently priced at 67%, while a more aggressive 50-basis-point cut has gained some traction, with a 33% probability, according to CME’s FedWatch Tool.
The upcoming CPI data will be crucial, as any deviation from expectations could either bolster or temper the Fed’s dovish stance. A softer inflation reading may support gold, as it could strengthen the case for a rate-cutting cycle. On the political front, the Harris-Trump debate could further sway market sentiment, with investors likely to keep a close eye on how the candidates’ policies might impact economic conditions ahead of the U.S. presidential election in November.
As inflation and political developments unfold, the combined impact of these factors could set the tone for gold prices in the near term.
Technical Outlook : Gold Futures
Gold prices surged nearly half a percent yesterday, rebounding from the day’s low of 71,580 and settling at 71,913.
Since August 20, prices have been consolidating within the 70,800-72,200 range, forming a series of higher highs. The Stock RSI is in favorable territory, signaling potential for further upside.
As a result, the probability of a breakout is expected to intensify in the near future. A break above 72,250 could trigger a rally towards 72,850-73,550.
However, if the breakout fails, consolidation is likely to continue.
Further, on the downside, if prices break the immediate support at 71,000, a plunge towards 70,300-69,750 could follow.
Today’s Price Action Hinges on CPI Data and Election Debate Outcomes!”
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Commodity Samachar Securities
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