Gold prices (XAU/USD) faced challenges on Tuesday, failing to build on the previous day’s recovery from the $2,485 support level and experiencing some selling pressure. Despite this, the metal managed to remain above the key psychological level of $2,500 during the early European trading hours. Traders appear hesitant to take strong positions ahead of crucial US inflation data due later this week. The US Consumer Price Index (CPI) is scheduled for release on Wednesday, followed by the Producer Price Index (PPI) on Thursday. These reports are anticipated to influence expectations regarding the Federal Reserve’s (Fed) potential rate cut this month and could provide new direction for gold prices.
As market participants brace for this significant data, the US Dollar (USD) has edged closer to its monthly high, following a reduction in speculation about a substantial Fed rate cut in September. This, combined with steady global equity markets, is seen as a headwind for gold, traditionally a safe-haven asset.
Despite the recent dip, XAU/USD remains within a familiar trading range observed over the past three weeks, reflecting market indecision about the near-term direction. Traders are advised to wait for a clear selling signal before considering further positioning in anticipation of a potential continuation of the recent decline from the historic highs achieved after last Friday’s mixed US jobs report.
