Gold News: Safe-Haven Demand Rises as Inflation and Rate Cut Uncertainty Grow

Gold Edges Higher as Traders Eye PPI Data and Treasury Yields

Gold prices are moving higher on Wednesday, rebounding from a two-day sell-off as traders assess inflation data and Treasury yields. The market recently regained a key minor pivot at $2903.56, positioning it to challenge the all-time high at $2942.78. However, a potentially bearish closing price reversal top formed earlier this week, and if today’s rally fails, renewed selling pressure could emerge.

Support levels remain at $2888.52, followed by a new minor bottom at $2864.33 and another pivot at $2857.49. The market’s reaction to these levels, along with recent volatility, suggests uncertainty and choppy trade conditions.

At 11:54 GMT, XAU/USD is trading $2916.45, up $12.49 or +0.43%.

Gold Gains on Trade War Concerns and Dollar Weakness

Gold’s rise is also being fueled by renewed concerns over U.S. trade policies. President Donald Trump’s announcement of reciprocal tariffs on countries that tax U.S. imports has injected uncertainty into global markets, boosting demand for safe-haven assets.

A weaker U.S. dollar is adding further support. The dollar index fell 0.2%, making gold more affordable for foreign buyers. Meanwhile, investors remain focused on upcoming U.S. inflation data, with the Producer Price Index (PPI) release expected at 13:30 GMT, followed by Friday’s retail sales report.

Hot Inflation Data Sparks Market Reactions

Gold initially fell over 1% on Wednesday after U.S. consumer price index (CPI) data came in hotter than expected. January’s CPI rose 0.5% month-over-month, exceeding forecasts of 0.3%, while annual inflation hit 3%, slightly above the anticipated 2.9%. Core inflation, which excludes food and energy, also exceeded expectations at 3.3% year-over-year.

Federal Reserve Chair Jerome Powell reiterated that the central bank is in no rush to cut interest rates, reinforcing market expectations that the Fed will remain cautious. Futures markets have adjusted, now pricing in a 78% chance of a 25-basis-point rate cut by September, with expectations rising to 94% by October.

Treasury Yields in Focus as Traders Await PPI Data

U.S. Treasury yields initially spiked following the CPI release but pulled back on Thursday as traders digested the inflation data and awaited further insights from the PPI report. The hotter-than-expected CPI print raised concerns that inflation remains sticky, potentially delaying Fed rate cuts.

The PPI report, which measures wholesale price inflation, will be closely watched for further confirmation of inflation trends. Higher-than-expected PPI could push yields higher and pressure gold prices, while a softer reading could ease market concerns and support the metal.

Gold Market Forecast: Bullish Bias with Key Resistance at $2942

Gold’s near-term outlook remains bullish as long as it holds above key support levels, particularly $2888.52. A break above $2942.78 would invalidate the recent bearish reversal pattern and signal a continuation of the uptrend.

However, a failure to sustain the current rally could lead to renewed selling pressure, especially if Treasury yields rise further on strong PPI data. Traders should closely monitor inflation reports and Fed rate expectations, as these factors will be critical in determining gold’s next move.

More Information in our Economic Calendar.