Gold edges lower as US Dollar strengthens on upbeat PPI and jobless claims

• Gold edges lower to $3,335 as a stronger US Dollar caps gains.
• The US-Russia summit in Alaska on Friday keeps sentiment fragile as Donald Trump warns of “very severe” consequences if Russia doesn’t halt the war in Ukraine.
• US PPI data shows inflation rising sharply in July, with both headline and core readings well above expectations.

Gold (XAU/USD) edges lower on Thursday, trading within the familiar range established earlier in the week as the US Dollar rebounds after upbeat Producer Price Index (PPI) and Weekly Jobless Claims data.

At the time of writing, the precious metal is hovering near $3,337 during the American session, down about 0.50% after marking an intraday high of $3,374.88 earlier in the Asian session.

July’s US Producer Price Index (PPI) surged 0.9% MoM, well above the 0.2% forecast and the flat reading in June, marking the largest monthly gain since June 2022. This lifted the annual rate to 3.3%, beating expectations of 2.5% and accelerating from 2.4% previously. Core PPI, which excludes food and energy, also rose 0.9% MoM, topping the 0.2% estimate and the prior month’s flat reading, pushing the yearly rate to 3.7% from 2.6% in June, above the 2.9% consensus.

Market sentiment is shaky ahead of Friday’s US-Russia summit in Alaska, with investors on edge over a possible geopolitical fallout. US President Donald Trump warned Wednesday that Russia will face “very severe” consequences if it doesn’t end the war in Ukraine, telling reporters at the Kennedy Centre that action will follow if Moscow refuses to agree to a ceasefire after his meeting with President Vladimir Putin, as reported by CNN.

While some market participants see the talks as an opportunity to ease tensions, others fear that an escalation could reignite safe-haven flows into Gold. A breakdown in dialogue would likely fuel fears of deeper geopolitical instability, especially if the US follows through on threats of retaliatory action against Russia.

Market movers: US Dollar stabilizes, yields drift lower with rate-cut bets building

• The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is recovering on Thursday after falling to a more than two-week low in the previous session. The index has climbed back above the 98.00 psychological mark following the release of stronger-than-expected PPI and steady Weekly Jobless Claims, as traders reassess the outlook for Federal Reserve rate cuts.
• US Treasury yields stabilise on Thursday after slipping on Wednesday, with the benchmark 10-year holding near 4.265% and the 30-year yield around 4.845%, as investors weigh stronger US inflation data against expectations of deeper Federal Reserve rate cuts before year-end.
• According to the CME FedWatch Tool, markets are now fully pricing in a 25 basis point rate cut at the Fed’s September meeting, up sharply from around 60% just a few weeks ago. Odds stand at roughly 66% for another cut in October and at 54.5% for a further reduction in December, underscoring the growing dovish tilt in market expectations.
• US Treasury Secretary Scott Bessent told Bloomberg TV on Wednesday that the Federal Reserve should be 150-175 basis points lower on rates. This followed his Fox Business interview late Tuesday, in which he urged a 50 bps cut in September, citing cooling inflation and revised weaker job data.
• Fed’s Austan Goolsbee said on Wednesday that upcoming Federal Reserve meetings will be “live” for policy decisions. He described tariffs as a “stagflationary shock” and expressed unease over the idea of a one-time price impact. Goolsbee noted that services inflation in the latest CPI report was “bad,” while describing the labor market as “pretty solid.” He added that slower job gains may reflect a drop in population growth rather than weakening demand and stressed that multiple months of favorable inflation readings are needed to gain the comfort required to cut rates.
• Fed’s Raphael Bostic said on Wednesday that the central bank has “the luxury” to wait before making a policy adjustment, given the strength of the labor market. He reiterated that he still sees one interest rate cut in 2025 as appropriate.
• US Initial Jobless Claims are expected at 228K, up from 226K previously, with Continuing Claims seen at 1.96 million, compared with 1.974 million earlier. July PPI is forecast to rise 0.2% MoM and 2.5% YoY, while core PPI is expected to rise 0.2% MoM and 2.9% YoY.

Technical analysis: XAU/USD stuck between $3,340-$3,370 as traders await US data

On a 4-hour chart, Gold (XAU/USD) is holding near the 100-period Simple Moving Average (SMA) near $3,352, while the 50-period SMA at $3,370 continues to act as immediate resistance.

Price action remains confined within the familiar range between $3,340 and $3,370, with repeated lower shadows on recent candles hinting at dip-buying interest.

However, bulls have yet to secure a sustained move above the upper boundary, keeping the short-term bias neutral unless Thursday’s Weekly Jobless Claims and PPI data provide a decisive catalyst.

A decisive break above $3,370 could pave the way toward the $3,400 psychological mark, while sustained rejection from this zone may trigger a pullback to the $3,340 support area. A breakdown below this level would expose the next psychological target at $3,300.

Momentum indicators paint a mixed picture. The Relative Strength Index (RSI) in the 4-hour chart is hovering around 46, signaling mild bearish momentum but no strong conviction, while the Moving Average Convergence Divergence (MACD) histogram shows signs of flattening after a recent bearish phase, with the signal line still marginally above the MACD line.