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Gold remains below $4,450 as traders await US inflation data for Fed rate cues

FXStreet · 2026-09-08T04:30:15Z
Gold remains below $4,450 as traders await US inflation data for Fed rate cues
  • Gold regains some positive traction on Tuesday as the USD extends its JPY-led decline.
  • Fed rate hike bets and geopolitical risks could limit USD losses and cap the commodity.
  • The upside seems limited as traders seem hesitant ahead of the key US inflation data.

Gold (XAU/USD) sticks to modest intraday gains through the Asian session on Tuesday, snapping a two-day losing streak as the recent US Dollar (USD) pullback from a three-week high gains momentum amid the rallying Japanese Yen (JPY). However, hawkish US Federal Reserve (Fed) expectations, along with persistent geopolitical uncertainties, offer some support to the safe-haven buck and keep the non-yielding bullion below $4,450. Traders also seem reluctant to place aggressive directional bets and opt to wait for the release of the latest US inflation figures, due later this week.

The US Producer Price Index (PPI) is due on Thursday and will be followed by the US Consumer Price Index (CPI) on Friday. The crucial data will be looked at for more cues about the Fed's policy path amid inflation risks stemming from higher energy prices. The outlook, in turn, will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the Gold price. Meanwhile, traders ramped up bets for a Fed rate hike later this month after the US Nonfarm Payrolls (NFP) report showed that job growth accelerated in August.

USD support seen as markets await key US CPI

Strategists at OCBC describe the latest US payrolls report as "supportive of the USD at the margin, but not sufficient on its own to drive a sustained leg higher." They argue that the stronger jobs data "reinforces the resilience of the US economy and should keep the risk of Fed tightening alive, which in turn may restrain USD downside." However, with "wage pressures still contained," OCBC expects markets will "require firmer inflation evidence before pricing a Sept hike with greater conviction." In this context, they note that "focus therefore shifts to this week’s CPI, where an upside surprise could provide the catalyst for renewed USD strength, while a softer print would likely keep price action more two-way."

Furthermore, the widening US-Iran confrontation keeps the geopolitical risk premium in play and should limit losses for the safe-haven Greenback. In the latest development surrounding the Middle East crisis, Iran threatened to retaliate against any new US attacks on its assets, warning that energy infrastructure across the Gulf was vulnerable. Adding to this, Iran’s security chief, Mohsen Rezaei, said that Tehran is preparing to enforce a full blockade around the Strait of Hormuz in response to economic sanctions, intensifying fears of a prolonged disruption to oil supplies.

Investors remain worried that elevated energy prices would rekindle inflationary pressures, underpinning prospects for Fed policy tightening. This, in turn, backs the case for the emergence of USD dip-buying and warrants caution for XAU/USD bulls. Hence, it will be prudent to wait for strong follow-through buying before positioning for any meaningful appreciating move for the Gold price and an extension of the recovery from an over one-month low, touched last week.

XAU/USD daily chart

Chart Analysis XAU/USD

Technical Analysis

The precious metal holds above the 200-day Exponential Moving Average (EMA) at roughly $4,288 and above a dense Fibonacci support band, keeping the near-term bias constructive despite fading momentum. Meanwhile, the Relative Strength Index (RSI) near 52 suggests a neutral-to-mildly positive tone. However, the Moving Average Convergence Divergence (MACD) below zero with a negative reading around -24 hints at waning upside pressure after the recent pullback.

The mixed technical setup suggests that the Gold price could face first resistance at the 23.6% Fibonacci retracement level of the June-August upswing, around $4,523. This is followed by the recent swing-high zone anchored by the upper Fibonacci reference near $4,697.36, where a break would reopen the path for a renewed leg higher. On the downside, initial support is seen at the 38.2% Fibo. retracement near $4,415, followed by the 50.0% level at about $4,328 and the 61.8% retracement around $4,241.94, with the 200-day EMA near $4,288 adding broader trend backing just below the market.

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

Inflation FAQs

Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.