Gold price rises on safe-haven demand amid trade uncertainties and rising geopolitical tensions.
A softer US CPI lifts Fed rate cut bets and weighs on the USD, further supporting the commodity.
Traders now look to the US economic releases for some meaningful impetus later this Thursday.
Gold price (XAU/USD) attracts some follow-through buyers for the second straight day and climbs to a one-week high, around the $3,377-3,378 region during the Asian session on Thursday. US President Donald Trump's fresh tariff threat offset a positive outcome from the high-stakes US-China trade talks. This, along with rising geopolitical tensions in the Middle East, tempers investors' appetite for riskier assets and drives safe-haven flows toward the bullion. Apart from this, the prevalent US Dollar (USD) selling bias is seen as another factor supporting the commodity.
Data released on Wednesday showed that US consumer prices rose at a slower-than-anticipated pace in May, reaffirming market bets that the Federal Reserve (Fed) will resume its rate-cutting cycle in September. The dovish outlook, along with the global flight to safety, leads to a further decline in the US Treasury bond yields, which drags the USD to the monthly low and benefits the non-yielding Gold price. Traders now look forward to the US macro data for some impetus, though the fundamental backdrop seems tilted in favor of the XAU/USD bulls.
Daily Digest Market Movers: Gold price is underpinned by a combination of supporting factors
US President Donald Trump flared up trade tensions on Wednesday, saying that he would set unilateral tariff rates and inform trading partners within two weeks. This adds a layer of uncertainty and overshadows the optimism led by a positive tone following US-China trade talks in London.
The US ordered some staff to depart its Baghdad embassy and allowed military families to voluntarily leave the Middle East amid rising security risks. This comes after Iran's Defence Minister Aziz Nasirzadeh threatened to strike US bases in the region if conflict erupts over its nuclear program.
Russia intensified bombardments that it said were retaliatory measures for Ukraine's recent attacks. A new concentrated wave of drone attacks on Ukraine's second-largest city of Kharkiv was reported early on Thursday. This keeps geopolitical risks in play and underpins the safe haven Gold price.
On the economic data front, the US Bureau of Labor Statistics (BLS) reported on Wednesday that the headline Consumer Price Index (CPI) rose less than expected, to the 2.4% annualized pace in May from 2.3% in the previous month. The consensus estimate was for a reading of 2.5%.
Meanwhile, the core gauge, which excludes volatile food and energy prices, matched April's increase and climbed 2.8% during the reported month. Traders are now pricing in a 70% chance that the Federal Reserve will cut interest rates in September, dragging the US Dollar to the monthly low.
The market focus now shifts to Thursday's US economic docket – featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims data. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the XAU/USD pair is to the upside.
Gold price could aim to reclaim $3,400; Wednesday’s breakout above the $3,350 hurdle in play
From a technical perspective, this week's rebound from the 200-period Simple Moving Average (SMA) and the subsequent strength beyond $3,348-3,350 horizontal resistance favors the XAU/USD bulls. This, along with positive oscillators on daily/hourly charts, validates the near-term constructive outlook and should allow the Gold price to climb further towards reclaiming the $3,400 round figure. Some follow-through buying should pave the way for an extension of the momentum to the $3,430-3,435 region, above which the commodity could aim to retest the all-time peak, around the $3,500 psychological mark touched in April.
On the flip side, the aforementioned resistance breakpoint, around the $3,350-3.348 area, now seems to protect the immediate downside. Any further pullback could be seen as a buying opportunity near the $3.323-3,322 region. This should help limit the downside for the Gold price near the $3,300 round figure, or the 200-period SMA on the 4-hour chart. The latter should act as a pivotal point, which if broken would shift the near-term bias in favor of bearish traders.
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