Gold is making a quiet comeback after Monday’s pullback, creeping higher as traders brace for a big one: the U.S. CPI report. XAU/USD is back near $3,350, riding a modest Dollar dip while everyone debates whether inflation will make or break the Fed’s rate-cut dreams.
Trade tension headlines, Trump’s tariff talk, and stubbornly strong U.S. yields are creating a tug-of-war in gold. For now, the metal is finding buyers on dips, but the real fireworks could hit when CPI drops.
Here’s what you should know and watch:
1. Dollar Eases, Gold Breaths Again
The U.S. Dollar finally stepped back from Monday’s multi-week peak, thanks to repositioning before CPI. That small USD retreat gave gold enough air to claw back some losses from the prior session’s slide. Traders know the next inflation print will set the tone, hot CPI keeps the Fed hawkish, cool CPI feeds the cut narrative.
2. CPI: The Big Swing Factor
Consensus? Headline CPI at 2.7% YoY, core at 3.0%. Even a slight downside surprise could supercharge gold by reviving September rate-cut bets. But if inflation stays sticky, gold’s upside could stall as Treasury yields hold firm. Either way, expect volatility to spike when that number hits.
3. Trump’s Tariff Bluff Keeps Gold in Play
Markets want a reason to calm down, but Trump’s tariff strategy keeps everyone on edge. Last week, he threw down 50% tariffs on copper and warned more letters are coming for 20+ countries. On Monday, he hinted at negotiation, which gave risk assets a boost. Still, as long as uncertainty lingers, safe-haven demand isn’t going anywhere.
4. Technical Levels You Can’t Ignore
Gold (XAU/USD) is holding firm near $3,360, just above the ascending trendline and 50-day moving average, signaling strong bullish momentum. Immediate resistance stands at $3,365, and a clean breakout could pave the way for a retest of $3,400, followed by the critical barrier at $3,426, last month’s peak. Beyond that, the psychological $3,450 and ultimate target at $3,500 remain in play if buyers sustain control.
On the flip side, $3,340 is the first support to watch, aligned with the recent consolidation zone. A deeper pullback finds footing around $3,324, while $3,300 remains the key line in the sand, also sitting close to the green demand zone. Breaching this level opens the door for a slide toward $3,282, with an extended decline eyeing the $3,167 region. As long as price stays above the rising trendline and these supports, the bullish structure remains intact, but a sharp break below could shift sentiment quickly.
5. Sentiment Split Before CPI
Equities are flashing green, signaling risk-on vibes, but traders aren’t ready to abandon hedges just yet. Gold’s holding steady tells us one thing: nobody wants to get caught wrong-footed ahead of data that could flip the macro narrative in seconds.
Here’s the Takeaway:
Gold’s bounce isn’t a breakout yet. CPI is the trigger, and the market’s loading the chamber. A softer print could send XAU/USD screaming toward $3,400, while a hotter one puts bears back in the driver’s seat. Either way, volatility’s about to get loud.
