Gold Eases 1.5% This Week as Hot PPI Hits Bullion—Fed Cuts Now in Question
Gold has lost altitude this week. Despite a small gain on Friday—spot gold rose about 0.4% to $3,348—stronger US wholesale inflation...
Quick overview
- Gold prices have declined this week, despite a slight gain on Friday, due to stronger US wholesale inflation and reduced expectations for a significant Fed rate cut.
- The Producer Price Index rose 3.3% year-on-year in July, surpassing forecasts and contributing to diminished hopes for a 50-basis-point cut.
- Analysts caution that ongoing wholesale inflation may lead to consumer price increases, complicating rate relief and limiting gold's potential upside.
- Key technical levels for gold are $3,350 for support and $3,400 for resistance, with a break above $3,400 potentially reigniting buying interest.
Gold has lost altitude this week. Despite a small gain on Friday—spot gold rose about 0.4% to $3,348—stronger US wholesale inflation and fading Fed cut hopes have pushed prices down by about this week. The Producer Price Index rose 3.3% year-on-year in July (versus 2.5% forecast) and jobless claims fell to 224,000, both data points killing hopes for a 50-basis-point cut. St. Louis Fed President Alberto Musalem further dampened optimism by saying there’s no need for such a big cut.
Analysts warn that persistent wholesale inflation could turn into consumer price gains, making it harder for rate relief and limiting gold’s upside as a non-yielding asset The Edge Malaysia+1. But softer CPI numbers earlier this week sparked some buying, with technicals noting a sustained break above $3,400 could be bullish.
Supply Shocks vs Rate Cut Hopes: A Delicate Balance
Inflation pressures have centred the narrative around whether the Fed should still cut. US Treasury Secretary Scott Bessent wants a big cut but recent data has trimmed market expectations to a 25-basis-point move. Meanwhile, geopolitical developments—Trump-Putin summit—have yet to deliver a safe-haven push Reuters+1.
Markets are now pricing in just one 25-bps cut in September and more to come later.
Why You Should Watch $3,350 and $3,400
Gold’s near-term is range-bound, with investors focusing on key technical levels and data. While hotter PPI numbers kill the chance of a big Fed move, softer CPI numbers keep rainbows of rate cuts on the horizon . A break above $3,400 could re-ignite buying in bullion.
Key levels to watch:
- Support: ~$3,350 (recent low)
- Resistance: ~$3,400 (trend pivot zone)
- Watching for signals around US inflation reports, Fed comments and the summit.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save