• Gold regains positive traction and stalls the overnight pullback from the all-time peak.
• Fed rate cut bets and reviving safe-haven demand offer some support to the precious metal.
• A modest USD uptick and a positive risk tone might act as headwinds for the XAU/USD pair.

Gold (XAU/USD) retains its bullish bias through the first half of the European session on Wednesday and remains well within striking distance of the all-time peak, touched the previous day. Moreover, the fundamental backdrop suggests that the path of least resistance for the bullion is to the upside, though bulls might opt to wait for the release of the US inflation figures. The US Producer Price Index (PPI) is due for release later during the North American session on Wednesday and will be followed by the US Consumer Price Index (CPI) on Thursday. The crucial data will play a key role in influencing the near-term USD price dynamics and providing a fresh impetus to the commodity.

In the meantime, bets for a more aggressive policy easing by the Federal Reserve (Fed), bolstered by last Friday's weak US Nonfarm Payrolls (NFP) report, keep a lid on the overnight USD recovery and help revive demand for the non-yielding Gold. Apart from this, persistent trade-related uncertainties, rising geopolitical tensions, and  French and Japanese political jitters turn out to be other factors supporting the safe-haven precious metal. This, in turn, validates the near-term positive outlook for the commodity and suggests that any corrective pullback could be seen as a buying opportunity.
 

Daily Digest Market Movers: Gold bulls look to US inflation data for fresh impetus

• An unexpectedly weak US jobs data released last Friday provided further evidence of a softening labor market and led markets to price in three interest rate cuts by the US Federal Reserve through the year-end. Moreover, the CME Group's FedWatch Tool indicates a small possibility of a jumbo 50-basis-point rate cut at next week's FOMC policy meeting.
• The Financial Times reported on Tuesday that US President Donald Trump has urged the European Union (EU) to impose 100% tariffs on Chinese and Indian goods in an effort to pressure Russian President Vladimir Putin. The report further stated that the Trump administration is prepared to "mirror" any tariffs imposed by the EU on Indian and Chinese imports.
• France's Prime Minister Francois Bayrou lost a vote of confidence in the National Assembly, resulting in his resignation. Moreover, Japan's Prime Minister Shigeru Ishiba announced over the weekend that he will step down as President of the ruling Liberal Democratic Party (LDP).
• On the geopolitical front, Israel carried out an air strike targeting Hamas leadership in Qatar's capital, Doha, drawing widespread global condemnation. Qatar's Prime Minister said that his country reserves the right to respond to Israel's blatant attack. Given that Qatar is  a key mediator, this could impact ceasefire negotiations between Israel and Hamas.
• Poland placed its air defenses on high alert in response to Russia's heaviest air assaults on Ukraine in recent weeks, which have raised concerns about the proximity of the strikes to its border. Moreover, Ukraine’s Air Force warned of a suspected Russian drone incursion into Polish airspace, breaching the North Atlantic Treaty Organization (NATO) airspace.
• A federal judge on Tuesday temporarily blocked Trump from removing Fed Governor Lisa Cook. This eases market concerns about the Fed's independence, which, along with some repositioning trade ahead of the crucial US inflation data, assists the US Dollar to preserve the previous day's recovery gains and might cap the upside for the precious metal.
• Wall Street’s three major indices posted record closing highs on Tuesday, and the spillover effect leads to a further rise in the Asian equity markets. This might further contribute to keeping a lid on the safe-haven commodity and warrants some caution. Traders now look forward to the release of the US Producer Price Index (PPI) for a fresh impetus later today.
• The focus will then shift to the US Consumer Price Index (CPI) on Thursday, which will play a key role in influencing the near-term USD price dynamics and determining the next leg of a directional move for the XAU/USD pair.
   

Gold bullish potential seems intact; overbought daily RSI warrants some caution
 

(Click on image to enlarge)

From a technical perspective, the daily Relative Strength Index (RSI) remains in overbought territory and makes it prudent to wait for some near-term consolidation or a further pullback before any further move higher. That said, the $3,600 round-figure mark could protect the immediate downside. This is followed by the weekly low, around the $3,580 region, below which the Gold price could extend the corrective slide towards the $3,565-3,560 intermediate support en route to last Thursday's swing low, around the $3,510 region.

On the flip side, the $3,640-3,645 zone could act as an immediate hurdle ahead of the all-time peak, around the $3,675 area touched the previous day. Some follow-through buying could allow the Gold price to build on the recent breakout momentum and aim towards conquering the $3,700 round figure. The broader technical setup, however, suggests that bulls might refrain from placing aggressive bets, suggesting that the said handle could act as a strong near-term barrier for the XAU/USD pair.

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