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Gold Struggles Below Record Highs as Traders Await Fed’s Next Move
Commodity
Traders' Opinions
Summary:
Gold prices remain under pressure near $3,630 despite softer Treasury yields and a weaker dollar, with investors weighing firmer US inflation data against growing expectations of Fed rate cuts.
Sell
TradingXAUUSD
EXP
3630.00
Entry Price
3580.00
TP
3680.00
SL
3644.94 +1.79 +0.05%
0
Point
Flat
3580.00
TP
CLOSING
3630.00
Entry Price
3680.00
SL
Gold (XAU/USD) remains on the back foot on Thursday, unable to build momentum despite a softer US dollar and falling Treasury yields in the wake of fresh US inflation data. The yellow metal, which briefly touched a record high near $3,675 earlier this week, is now consolidating around $3,630 per ounce and struggling to attract meaningful new buying interest. The retreat highlights investor caution ahead of a highly anticipated Federal Reserve policy decision next week, which could set the tone for bullion in the months ahead.
The latest inflation print offered a mixed picture. The US Consumer Price Index (CPI) climbed 0.4% month-on-month in August, above the 0.3% forecast and quickening from July’s 0.2% pace. On an annual basis, headline inflation held steady at 2.9%, matching expectations but marking an uptick from the 2.7% seen previously. More importantly for policymakers, the Core CPI—excluding volatile food and energy—rose 0.3% MoM and 3.1% YoY, exactly in line with consensus and unchanged from July.
The data suggest inflation remains sticky enough to prevent the Fed from easing aggressively, but not hot enough to derail the broader disinflation narrative. That nuance explains why gold has failed to extend its breakout: while inflation data reinforces the likelihood of near-term rate cuts, it also tempers the scale of market bets on deeper or faster easing.
Adding to the complexity is a stream of softer US economic readings. Recent Producer Price Index (PPI) data undershot forecasts, while the August Nonfarm Payrolls report disappointed with slower job creation and downward revisions to prior months. The unemployment rate also ticked higher, painting a picture of a labor market that is cooling more quickly than the Fed would like. Together, these releases have bolstered the case for policy easing, with futures markets fully pricing in a 25 basis-point cut next week and even leaving room for as many as three cuts before year-end.
That outlook provides a cushion for gold. Lower interest rates generally reduce the opportunity cost of holding non-yielding assets such as bullion. However, with the metal already trading near record highs, investors appear hesitant to chase prices higher until they see clearer signals from policymakers.
Gold’s performance this week illustrates the uneasy balance between short-term profit-taking and long-term structural demand. On one hand, central banks and sovereign buyers continue to accumulate gold as a hedge against currency debasement and geopolitical instability. On the other, speculative flows are increasingly tied to day-to-day shifts in Fed rate expectations, making the metal vulnerable to corrections when economic data delivers surprises.
The current price action feels less like a rejection of gold’s bullish story and more like a pause. If the Fed confirms a dovish tilt next week, a retest of $3,675 and potentially $3,700 is likely. Conversely, any indication that the central bank intends to move cautiously—or that inflation risks remain unresolved—could trigger a deeper correction, potentially back toward the $3,600 region.
Technical Analysis
On the charts, gold is showing signs of consolidation after its parabolic rally earlier this week. Prices have formed a descending triangle pattern following the sharp push to $3,674, a setup often associated with bearish continuation. The yellow metal has also retreated in intraday trading, as it searches for a higher low that could serve as a base for the next leg upward.
Momentum indicators are sending mixed signals. The Relative Strength Index (RSI) has eased from overbought conditions and is now flashing positive overlaps, suggesting that downside momentum may be fading. This supports the view that sellers are losing steam, though confirmation will require a decisive breakout from the current range.
Given the illustrated setup, traders should watch the demand zone around $3,600 closely. A break below this level could open the door for a deeper retracement, possibly toward $3,580. On the flip side, sustained buying above $3,640 would undermine the bearish triangle and shift focus back toward $3,675 and beyond.
TRADE RECOMMENDATION
SELL GOLD
ENTRY PRICE: 3630
STOP LOSS: 3680
TAKE PROFIT: 3580
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