Gold’s Futures price remains anchored above $1,945 per ounce on Thursday, under persistent pressure as investors brace for pivotal US inflation data this week, potentially influencing the course of interest rates.

The impending release of the US consumer price index (CPI) report on Thursday, followed by the producer price index (PPI) report the next day, holds the market’s attention as these indicators are poised to shape future market dynamics.

The precious metal has been facing downward pressure since mid-July, a period marked by indications of robust economic resilience in the US and growing expectations that the Federal Reserve will maintain its restrained monetary policy stance for the foreseeable future.

Richmond Fed President Thomas Barkin’s recent comments underscore the central bank’s deliberate approach, highlighting the importance of studying data before making decisions about potential further rate increases.

Concurrently, recent data from China revealed that consumer inflation in the country experienced its first decline in over two years during July. Additionally, the producer inflation index continued its negative trend for the tenth consecutive month.

From a technical perspective, the gold market has approached the Year’s developing VWAP, which acted as a buying level in today’s session. However, the presence of a bearish imbalance on the daily interval raises the possibility of absorption around the highs, contingent on the outcome of the impending CPI report.

The potential for easing inflation could lend support to gold due to its implications for monetary policy. Conversely, a higher CPI reading might lead to a prolonged pause in elevated interest rates, thus exerting pressure on the gold market.

Examining the prior volume profile structure reveals a multiple distribution setup as the market nears filling the low volume area. This tends to drive a micro balanced behavior, with the POC levels of these individual distributions potentially acting as selling points.

In the options landscape, signs of call interest are evident, particularly within the realm of the first standard deviation. According to COT data from August 1st, money managers reduced net long exposure in the third week while increasing net short positions.

Considering the daily interval, there’s a potential for a rotation towards the Year’s lower value extreme if the market fails to sustain follow-up buying after finding support at the currently influential Year’s developing VWAP.

While the lower dollar during this session could be a bullish factor, the positive volatility within the gold market might conversely exert pressure, resulting in a balanced behavior. Traders are likely to rely on the market’s extremes to deduce rotational scenarios.

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