Gold is extending its recovery after falling toward the $4,350 area earlier this week, with XAU/USD climbing back above the $4,400 level during Thursday’s Asian session, September 10. However, the rebound remains cautious as traders prepare for a crucial round of US inflation data that could reshape expectations for Federal Reserve policy.
The market is now focused on the US Producer Price Index (PPI) and Consumer Price Index (CPI), due Thursday and Friday. These reports could provide fresh clues about whether inflationary pressures are easing or proving persistent enough to influence the Fed’s interest-rate path.
Gold has gained fresh support as the US Dollar struggles to maintain momentum, while uncertainty over the Federal Reserve’s next policy decision, a stronger Japanese Yen, and US fiscal concerns continue to drive volatility. The US Treasury’s plan to increase bond buybacks to as much as $6 billion has also helped improve sentiment toward gold, despite volatile Treasury yields. As a non-yielding asset, gold tends to benefit when investors seek protection from financial-market uncertainty and a weaker Dollar.
However, US inflation remains the next major test for gold. Hotter-than-expected data could strengthen expectations for a restrictive Fed, pushing Treasury yields and the Dollar higher and weighing on XAU/USD. In contrast, softer inflation could reinforce expectations for a less hawkish Fed and support further gains in gold. The headline PPI is expected to rise to 5.3% year-on-year in August from 4.7%, while core PPI is forecast at 4.6% versus 4.2% previously.
Technical Analysis
Technically, gold retains a constructive short-term structure, but the metal has yet to confirm a decisive breakout. XAU/USD is trading around $4,412, remaining above its 50-day SMA near $4,267 and 100-day SMA around $4,340. Holding above these averages suggests that buyers continue to defend lower levels.
However, the 21-day SMA near $4,463 is currently acting as immediate resistance. A sustained move above this level could strengthen the bullish case and expose the next resistance around the 200-day SMA near $4,538.
On the downside, the $4,340 region represents an important support zone around the 100-day SMA. A break below it could expose the 50-day SMA near $4,267.
The daily Relative Strength Index (RSI) is around 51, indicating slightly positive momentum without showing that gold is significantly overbought. This leaves room for either a continuation higher or another period of consolidation depending on the inflation outcome.
US inflation data could trigger the next major move in gold. Hotter PPI/CPI may lift the Dollar and yields, pressuring XAU/USD toward $4,340, while softer data could support a break above $4,463 toward $4,538. These are the key levels traders should watch.
