Gold price update saw an uptick during Tuesday’s mid-North American trading session, climbing by around 0.30%. This increase came as traders braced for the upcoming US inflation report for August, a key indicator that could influence the Federal Reserve’s future rate decisions. Alongside this, the financial markets are also watching the first presidential debate between Vice President Kamala Harris and Donald Trump, which may impact market dynamics. At the moment, gold (XAU/USD) is trading at $2,514, having rebounded from earlier lows of $2,500.
US Inflation Report Shapes Market Sentiment
The overall market sentiment has improved, with the US dollar (Greenback) losing some of its earlier gains, providing a favorable environment for gold prices. At the same time, US Treasury bond yields have dropped in anticipation of the upcoming Consumer Price Index (CPI) data. The CPI is expected to highlight the Federal Reserve’s cautious stance, reinforcing speculation that the central bank may initiate a rate-cutting cycle due to concerns about a possible weakening in the labor market.
Federal Reserve’s Rate Cut Expectations
The swaps market now predicts a higher probability of a 50 basis point (bps) rate cut, with the likelihood standing at 33%. Additionally, the odds for a 25 bps cut are now at 67%, according to data from the CME FedWatch Tool. A recent poll by Reuters found that 92 out of 101 economists anticipate the Federal Reserve to lower interest rates by 25 bps at their September 17-18 meeting.
Political developments are also starting to draw attention, as the US presidential election approaches. On Tuesday, Vice President Kamala Harris and former President Donald Trump will meet for their first debate, which could further influence market sentiment.
Daily Market Movements: Gold Prices in Focus
Gold price update advanced on Tuesday, with the US dollar erasing earlier gains. The US Dollar Index (DXY), which measures the dollar’s performance against six major currencies, stood at 101.62. The yield on the US 10-year Treasury note dropped by five basis points to 3.648%, reflecting cautious positioning by traders ahead of the CPI report scheduled for September 18-19.
The August CPI data is expected to show a decrease from 2.9% to 2.6% year-over-year, while core CPI is projected to remain steady at 3.2%. Last week’s Non-Farm Payrolls (NFP) report revealed that the US economy added 142,000 jobs, falling short of the consensus forecast of 160,000. However, the drop in the unemployment rate provided some support to the dollar.
Federal Reserve officials have maintained a dovish stance. New York Fed President John Williams suggested that cutting rates could help balance the labor market, while Governor Christopher Waller indicated that it might be the right time to ease monetary policy. Chicago Fed President Austan Goolsbee also confirmed an “overwhelming” consensus among policymakers to reduce borrowing costs.
Technical Overview: Gold Price Outlook
From a technical perspective, gold (XAU/USD) continues its steady climb but has not yet surpassed the all-time high of $2,531, as traders await key economic data releases. Momentum indicators like the Relative Strength Index (RSI) suggest that gold prices may continue trading sideways in the near term.
Should gold break above its all-time high, the next resistance level is likely at $2,550, with the psychological threshold of $2,600 following closely. Conversely, if the price falls below $2,500, the next significant support level could be the August 22 low of $2,470. Further declines might lead the price toward the $2,450 to $2,440 range, a key support zone that includes the 50-day Simple Moving Average (SMA).
Conclusion
As traders await the US inflation report, gold prices remain in focus, with potential market shifts tied to upcoming CPI data and political events. Keeping an eye on these developments will be crucial for anyone interested in the gold market. For more detailed updates and insights, visit Daily Gold Signal and stay informed about the latest trends.
