Gold rises to a new weekly high, supported by a variety of reasons.
Gold price (XAUUSD) trades with a positive bias for the third day in a row on Wednesday, hovering near the weekly high of $2.520. The gain, however, lacks follow-through purchasing as traders appear hesitant and choose to wait for the release of the latest US consumer inflation data later in the North American session. The key US consumer price index (CPI) The report will play an important role in shaping expectations about the extent of the Federal Reserve’s (Fed) rate decrease at the September 17-18 policy meeting, providing some substantial impetus to the non-yielding yellow metal.
The cautious market attitude supports the safe-haven XAUUSD, despite a minor USD decline.
Heading into the significant data risk, the prospect of an imminent start to the Fed’s policy-easing cycle attracts some US Dollar (USD) selling near the monthly peak. This, combined with a generally worse tone in the equities markets, expected to drive some haven flows toward the gold price. The current range-bound price action, however, suggests that it is best to wait for strength beyond the $2,525 supply zone before positioning for any additional upward advance. Nonetheless, the fundamental background biased in favor of bulls, which suggests The path of least resistance for the XAUUSD remains to the upward.
Daily Market Movers: Gold price gains support from weaker risk tone, Fed rate cut predictions ahead of US CPI.
Asian markets got off to a rough start on Wednesday as investors braced for critical US inflation data, which drives some shelter flows to the gold price.
The headline US Consumer Price Index (CPI) predicted to grow 0.2% in August, with the annual rate slowing from 2.9% to 2.6%, the lowest since 2021.
Meanwhile, the core CPI, which excludes volatile food and energy prices, expected to rise by 0.2% and remain constant at 3.2% year on year during the reporting month. Any additional signs of lowering inflation would raise market betting on the Federal Reserve’s more aggressive policy easing, which would be good news for the non-yielding yellow metal.
Traders avoid placing strong wagers before the release of the critical US CPI report.
In contrast, the reaction to a higher CPI figure is more likely to be muted because investors believe the US central bank will begin decreasing borrowing prices in September.
According to the CME FedWatch Tool, the markets are presently pricing in a 67% chance of a 25 basis point rate drop at the upcoming FOMC policy meeting on September 17-18.
Meanwhile, the first debate between Democratic Vice President Kamala Harris and Republican presidential candidate Donald Trump had no impact on market mood.
