gold prices have made a notable recovery, rising above $2,660 earlier this week as traders focus on upcoming US inflation data. Speculation surrounding tariff policies linked to the Trump administration is influencing movements in both the US dollar and gold prices. On a technical level, gold appears to be positioned as a potential “buy-the-dip” opportunity, according to daily analysis.
During Asian trading on Tuesday, gold found new interest among buyers as it approached the $2,660 level. This buying activity precedes a crucial report on the Producer Price Index (PPI), set to be released later today. Anticipation runs high as this data is expected to impact market sentiment significantly.
The recent discussions about tariffs under the Trump administration have contributed to the strengthening of gold prices. As the US dollar consolidated its previous losses and US Treasury yields faced downward pressure, gold sought to challenge the $2,700 level once again. A rally in Chinese equities has also buoyed overall market sentiment, with investors optimistic about potential monetary stimulus measures from China aimed at bolstering economic growth.
Market analysts note that there has been a shift in expectations regarding Federal Reserve interest rate cuts. Following a robust US Nonfarm Payrolls report from last week, forecasts have been adjusted to predict only one rate cut this year, down from two. This shifting sentiment makes today’s PPI data critical in shaping expectations for the Fed’s future actions and its effects on the US dollar and gold prices. Current estimates suggest annual PPI inflation could rise to 3.4% in December from 3% the previous month.
Stronger inflation data could reignite demand for the US dollar, leading to potential corrections in gold . Conversely, a weaker-than-expected PPI could propel gold past $2,700, especially with expectations of a softer Consumer Price Index (CPI) report looming. Moreover, ongoing discussions about tariff strategies under the newly incoming administration could further influence gold market dynamics.
From a technical standpoint, gold prices have shown resilience after a recent decline. Momentum indicators suggest that there could be further upside movement, particularly following last week’s breakout from a symmetrical triangle formation. The immediate support level is around $2,641, coinciding with a 50-day moving average. If declines stabilize, gold may find further support at $2,635, which integrates other moving averages, with a critical low point at $2,615 that buyers should closely monitor.
