gold prices are witnessing a modest recovery early Thursday, remaining steadfast above the $2,500 mark. This upward movement comes as traders adjust their strategies ahead of the upcoming US Producer Price Index (PPI) and Jobless Claims data, following the recent Consumer Price Index (CPI) figures.
The market has been largely subdued since the US CPI data release revealed a 0.2% month-over-month increase for August, match with expectations. Additionally, core CPI numbers showed a 0.3% rise, slightly surpassing forecasts. Although the annual headline CPI cooled to 2.5%, the persistent core inflation metrics have tempered market expectations regarding a significant interest rate cut by the Federal Reserve this month. Currently, traders are estimating an 85% probability for a rate reduction of 25 basis points, up from 71% prior to the CPI release.
gold tested the critical barrier of $2,530 before retracing sharply due to strengthened performance in the US Dollar and rising Treasury yields linked to inflation fears. Nonetheless, the commodity has managed to hold onto essential short-term support at around $2,505, allowing it to remain within a three-week consolidative phase.
On Thursday’s trading front, gold buyers are striving to regain momentum but face challenges from a robust US Dollar and improving market sentiment. However, gains in other precious and industrial metals may offer support, especially with possible export restrictions being considered by Russia. Traders are also keenly awaiting the latest US economic data, which could provide further direction on Federal Reserve policies and impact both the US Dollar and gold prices.
From a technical perspective, gold remains stable with daily closing prices above the 21-day Simple Moving Average (SMA) at $2,505. The Relative Strength Index (RSI) indicates potential bullish momentum, although it has plateaued above the neutral threshold. A sustainable breakout above the recent high of $2,532 is vital for further advances toward the $2,550 level. Conversely, a failure to clear the $2,530 zone could invite a correction, especially if it dips below the 21-day SMA, potentially targeting previous lows around $2,472.
