Image Source: Unsplash
 

Spot and futures gold prices slipped in early Monday trading, falling over 1% at the time of writing. Hopes of a diplomatic thaw in the Ukraine conflict dented safe-haven demand, also dragging silver lower. This comes after a confusing end to last week, when chatter over gold tariffs saw futures rally to fresh record highs, while spot gold stayed relatively flat, finishing just shy of the pivotal $3,400 mark. That level remains the first real test ahead of Tuesday’s all-important US CPI release, followed by a string of inflation readings later in the week—events that could shape the dollar index forecast, bond yields, and, inevitably, gold prices.

Monday’s pullback in the price of gold has effectively erased last week’s gains, which were fuelled by a weaker US dollar and softer data, despite buoyant equity markets and a burst of risk-on sentiment. Traders are reassessing positions after Donald Trump announced he would meet Vladimir Putin in Alaska on 15 August to discuss a possible end to the war. While today’s decline is notable, gold prices remain rangebound. Persistent trade uncertainty and expectations of two—possibly even three—Federal Reserve rate cuts before year-end, starting in September, continue to underpin the downside.
 

US inflation data to take centre stage

This week’s calendar is packed with economic releases capable of swaying gold prices. The US Consumer Price Index lands on Tuesday, followed by Thursday’s Producer Price Index. Friday brings the University of Michigan’s Inflation Expectations survey, along with consumer sentiment, retail sales, the Empire State Manufacturing Index, and industrial production figures.

While the Fed’s dual mandate covers both employment and price stability, it is the inflation target—anchored at 2%—that markets are laser-focused on. Investors are watching for any sign that higher tariffs and rising input costs are filtering through to consumers. Thus far, CPI has undershot forecasts for five consecutive months, but that streak may be about to end.

The PPI report will be key in shaping expectations for the Fed’s preferred inflation gauge, the core PCE index, due later this month. Meanwhile, retail sales will be closely scrutinised for signs of consumer fatigue. A mix of cooling spending and rising inflation could reawaken stagflation fears—conditions that typically support gold prices.
 

Markets eye September Fed cut

Recent soft employment data has fuelled bets that the Fed will start easing as early as September, with another cut potentially in October. The December meeting remains finely balanced. Weak ISM readings, rising jobless claims, and a softer services sector have added weight to the dovish view. Several Fed policymakers have already hinted at multiple cuts this year, even as inflation risks persist—keeping gold prices supported despite a roaring equity market.
 

Gold technical analysis and trade ideas
 

(Click on image to enlarge)

A descending trend line remains in play, drawn from April’s $3,500 peak through June’s $3,451 and July’s $3,439 highs. This line was probed again on Friday near $3,400 and held firm during Asian trade overnight. A series of lower lows would confirm a near-term top, but given the lofty levels and faltering bullish momentum, traders would be wise not to dismiss bearish signals too quickly.

However, a break above $3,400 resistance could open the door to fresh record highs in spot gold prices. Initial support is seen at $3,335, with $3,300 as the next key marker. A decisive close beneath $3,300 would bring the June low of $3,248 into focus, tilting the balance towards the bears.

More By This Author:

S&P 500: Valuations And Seasonal Factors Could Come Into Focus
What Now For Gold After Friday’s Big Bounce?
S&P 500: Big Tech Buoys Markets Amid Trade Tensions