Gold steadies as traders balance soft US inflation data against rising Oil prices

• Gold reverses intraday losses as soft US PPI data weighs on the US Dollar and Treasury yields.
• Softer US CPI and PPI data cool near-term Fed rate hike bets, but rising Oil prices keep inflation risks alive.
• Technically, XAU/USD keeps a bearish bias below its key moving averages, with sellers eyeing a sustained break below $4,000.

Gold (XAU/USD) steadies on Wednesday, erasing intraday losses after softer-than-expected US Producer Price Index (PPI) data push the US Dollar (USD) and US Treasury yields lower.

At the time of writing, XAU/USD trades around $4,060, up 0.15% on the day, rebounding from an intraday low of $4,017.

The headline PPI fell 0.3% MoM in June, below the forecast of 0%, after rising 0.6% in May. On an annual basis, producer inflation slowed to 5.5% from 6.0%, also undershooting the 6.2% forecast.

Core PPI, which excludes food and energy, rose 0.2% MoM, below expectations for a 0.4% increase but above the previous 0.1% gain. The annual core rate edged up to 4.7% from 4.6%, but it remained below the 5.2% forecast.

The latest figures follow weaker-than-expected US Consumer Price Index (CPI) data released on Tuesday. The softer inflation readings have reduced expectations of an immediate Federal Reserve (Fed) interest rate hike, lifting the non-yielding metal.

Still, the metal lacks strong upside momentum as inflation risks persist, with Oil prices creeping higher again following renewed fighting in the Middle East. This keeps the possibility of a Fed interest rate hike later this year on the table.

In an interview with Fox News on Tuesday, US President Donald Trump warned that military strikes against Iran would intensify unless Tehran resumed negotiations. "Next week comes the bridges. We're going to knock out all their power plants. We're going to knock out all their bridges unless they get to the table and negotiate," Trump said.

New York Fed President John Williams said on Wednesday that with inflation still running high, it is imperative to return it to the 2% target on a sustained basis. Williams added that the current policy stance is well-positioned to achieve that goal.

Williams expects headline inflation to ease to around 3.25% by the end of this year, move closer to the Fed’s target in 2027 and reach 2% in 2028.

Meanwhile, Fed Chair Kevin Warsh reiterated the central bank’s commitment to bringing inflation back to its target during his congressional testimony on Tuesday, saying “no tolerance for persistently elevated inflation.”

Technical analysis: XAU/USD keeps bearish bias with $4,000 support in focus

On the daily chart, XAU/USD retains a bearish near-term bias as the price holds well below the 50-day, 100-day and 200-day Simple Moving Averages (SMAs). The clustering of these longer-term SMAs above spot suggests upside attempts are likely to be capped for now.

The Relative Strength Index (RSI) around 40 stays in neutral-to-soft territory, hinting at limited bullish momentum despite a pause in the recent slide. The Average Directional Index (ADX) at 38.37 points to a still-established trend backdrop.

On the topside, initial resistance emerges at the horizontal level of $4,200, ahead of the 50-day SMA near $4,319 and another barrier at $4,400, with the 200-day SMA at $4,495 and the 100-day SMA at $4,559 marking a broader supply zone higher up.

On the downside, immediate support is seen at the psychological $4,000 handle, and a sustained break below this floor would likely open the way for a deeper bearish extension in line with the prevailing trend structure.

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