Gold prices hold steady as USD recovers modestly ahead of US CPI release.

Gold Price Consolidates Near Weekly Highs as Traders Await US CPI for Fed Rate-Cut Signals

Gold price (XAU/USD) continues its sideways consolidation near the weekly peak during the early European session on Wednesday, as traders adopt a cautious stance ahead of the release of the US Consumer Price Index (CPI). The upcoming inflation data is expected to provide critical insights into the Federal Reserve’s (Fed) interest rate trajectory, directly impacting US Dollar (USD) demand and influencing gold’s price direction.

Gold Price Trends Amid USD Recovery and Market Sentiment

A moderate rebound in the USD, following its recent decline to its lowest level since October 16, is limiting further gold price gains. Meanwhile, a recovery in global equity markets also poses resistance for the yellow metal. However, lingering concerns over trade tensions, US economic uncertainties, and expectations of Fed rate cuts continue to support gold as a safe-haven asset.

Key Market Movers Impacting Gold Prices

1. US Trade Policy & Market Reaction

US President Donald Trump intensified trade tensions by announcing a tariff hike on Canadian steel and aluminum imports to 50%, providing a temporary boost to gold prices. However, he later rolled back the decision after Ontario Premier Doug Ford suspended an electricity surcharge on exports to the US, leading to a shift in market sentiment.

2. US Government Spending Bill & Market Confidence

The US House of Representatives narrowly passed a Republican-led spending bill, preventing a government shutdown and ensuring funding until September. The bill now moves to the Senate, requiring Democratic support to pass. The potential resolution of government funding uncertainties has strengthened investor confidence, adding pressure on gold.

3. US-Russia Ceasefire Proposal & Risk Sentiment

Ukraine has signaled its willingness to accept a 30-day ceasefire proposal brokered by the US during talks in Jeddah, Saudi Arabia. If accepted by Russia, this move could ease geopolitical tensions, potentially reducing demand for gold as a safe-haven asset.

4. US Economic Outlook & Fed Rate Cut Speculations

Over the weekend, Trump refrained from ruling out the possibility of a recession, highlighting economic risks tied to his policy approach. Meanwhile, signs of a cooling US labor market have fueled expectations that the Fed may resume rate cuts. Current market pricing suggests three 25-basis-point rate cuts by the end of 2025, which could limit the USD’s recovery and provide support for gold prices.

What’s Next for Gold? Key Focus on US CPI Data

With traders awaiting fresh cues, the upcoming US CPI report will be a decisive factor in shaping gold’s near-term outlook. If inflation data reinforces expectations of a Fed rate cut, gold prices could see renewed bullish momentum. Conversely, a stronger-than-expected CPI reading may bolster the USD, pressuring gold lower.

Final Thoughts

Gold prices remain range-bound as traders navigate shifting market dynamics. The interplay between US economic data, Federal Reserve policy expectations, and geopolitical developments will continue to drive XAU/USD movements. Investors should keep a close eye on the US CPI release, as it holds the potential to trigger significant volatility in both the USD and gold markets.

Stay tuned for real-time market updates and insights!