Gold slumps to near $4,350 amid oil-driven inflation fears, US inflation data in focus

• Gold price tumbles to around $4,350 in Wednesday’s early Asian session. 

• US forces hit Iranian tankers in response to attacks on US ships. 

• The US PPI and CPI inflation data will take center stage later . 

Gold price (XAU/USD) falls to near $4,350 during the early Asian session on Wednesday. The precious metal faces some selling pressure as rising oil prices fueled inflation ‌concerns and boosted expectations for a rate hike by the Federal Reserve (Fed) in September. All eyes will be on the US inflation data later. 

Bloomberg reported on Tuesday that US forces have struck multiple Iranian tankers tied to Iran’s Islamic Revolutionary Guard Corps (IRGC) in response to attempted missile attacks on a US warship. Additionally, Iran’s semi-official Mehr news agency reported that explosions were heard on the country’s Kharg Island.  Saudi Arabia said operations at several of its energy facilities were halted by Houthi attacks.

Escalating tensions in the Middle East pushed oil prices higher, stoking concerns about rising interest rates. This, in turn, could weigh on the yellow metal. 

Traders brace for the key US Producer Price Index (PPI) and Consumer Price Index (CPI) inflation data later in the day, which‌ could shape expectations for the Fed’s next policy move.

“Higher oil prices are keeping inflation concerns alive, so this week’s US PPI and CPI will be key in determining whether yields extend higher or retrace,” said Christopher Wong, strategist at Oversea-Chinese Banking Corp.

Traders priced in an over 59.4% chance of a Federal Reserve rate increase this month, according to the CME FedWatch tool.

Gold traders brace for inflation-driven repricing of Fed expectations

According to Commerzbank, the current calm in Gold masks the potential for a sharp shift in Fed pricing once the upcoming US inflation data are released. Strategists at the bank caution that, with markets still finely balanced on the prospect of a September move, “there is still considerable scope for a correction in interest rate expectations should the inflation data surprise significantly on the upside or downside.” This, they suggest, leaves Gold particularly sensitive to any deviation from consensus in the inflation print, as investors reassess the Fed’s likely path.

Technical Analysis: Gold retains a neutral tone in the near term

In the daily chart, XAU/USD sits just above the 100-day simple moving average (SMA) , while still trading below the 20-day Bollinger midline around $4,466, leaving the near-term bias broadly neutral and pointing to range conditions. Price is effectively mid-band between the Bollinger lower band and the upper band, with the Relative Strength Index (RSI) hovering around 47, which hints at lack of directional conviction after the recent pullback.

On the topside, initial resistance emerges at the 20-day Bollinger SMA around $4,465, and a sustained break above this area would expose the upper Bollinger boundary near $4,675 as the next barrier. On the downside, immediate support is provided by the 100-day SMA at roughly $4,345, with the lower Bollinger band near $4,258 acting as a deeper support zone if sellers regain control.

(The technical analysis of this story was written with the help of an AI tool. Know more.)