FX.co ★ XAU/USD, GOLD

Gold prices (XAU/USD) edged up slightly from around $4,300 during Friday's Asian trading session, after hitting a one-and-a-half-week low. However, persistent macroeconomic pressures appear to be severely limiting the potential for further gains in gold. The main catalyst for gold prices remains the recently released US Producer Price Index (PPI) report. This report significantly reinforced market expectations of an imminent interest rate hike by the Federal Reserve, which has strengthened the dollar and continued downward pressure on non-yielding gold. Market participants are currently cautious, preferring to wait and see before making final decisions on their investment positions following the release of key US consumer inflation data. According to data released by the US Bureau of Labor Statistics, the overall Producer Price Index (PPI) rose 5.4% year-on-year in August, exceeding market expectations and up from the revised 4.8% in July. The core PPI rose 4.6% year-on-year, in line with expectations. Ongoing inflationary pressures have been exacerbated by soaring energy costs, particularly amid the sharp escalation of the geopolitical conflict between the United States and Iran, which has pushed oil prices to their highest levels since May. Reports that the US Treasury is poised to impose sanctions on financial institutions linked to Iran, coupled with the Iranian-backed Houthis’ capture of the strategic port of Mocha on the Red Sea, effectively controlling the Bab el-Mandeb Strait, have heightened concerns about prolonged disruptions to global energy supplies. Furthermore, some political leaders have suggested that the ongoing conflict could persist into the fall, intensifying supply concerns and maintaining a long-term geopolitical risk premium in the market. This situation continues to support high energy valuations and the appeal of the US dollar as a safe haven, meaning that stronger-than-expected consumer inflation data could quickly drive the dollar higher and jeopardize any short-term recovery in gold prices. Therefore, the fragility of precious metals remains, as they continue their downward trend and demonstrate a high sensitivity to upcoming macroeconomic indicators that may confirm monetary policy tightening by central banks. Technically, the gold/US dollar pair is currently trading slightly above key medium-term support levels, the 50% Fibonacci retracement level at $4,320, and the 200-day exponential moving average at $4,313. Despite this temporary support, the underlying momentum indicators are clearly weak, with the Moving Average Convergence Divergence (MACD) in negative territory and the Relative Strength Index (RSI) hovering below the 50 neutral line, suggesting a decline in bullish momentum. On the upside, initial technical resistance lies at the 38.2% Fibonacci retracement level near $4,409, followed by resistance at the 23.6% level near $4,519. Conversely, a break below the immediate support zone at $4,320 and the 200-day moving average could lead to a deeper pullback, with the 61.8% Fibonacci retracement level at $4,231 and the 78.6% level at $4,104, while the cycle low near $3,943 represents a further structural target.