FX.co ★ XAU/USD, GOLD

Gold (XAU/USD) experienced follow-through selling pressure for a second consecutive session, extending its retreat from its multi-month peak near $4,450—the highest level recorded since June 5—before finding firm technical support just above the $4,300 handle. Market participants remained cautious, refraining from placing aggressive directional bets as a combination of cooling U.S. inflation metrics and ongoing Middle Eastern geopolitical friction produced a highly complex macro environment. On the economic front, U.S. Producer Price Index (PPI) figures released Thursday revealed that wholesale prices were completely unchanged in July, missing expectations for a 0.2% monthly increase. Additionally, the annualized PPI rate decelerated from 5.5% in June to 4.7%, coming in well below the 4.9% consensus estimate. Coupled with Wednesday’s Consumer Price Index (CPI) report, which showed headline inflation moderating to 3.4%, the data confirms a broad-based cooling in price pressures that grants the Federal Reserve ample scope to leave interest rates unchanged at its upcoming September policy meeting, keeping U.S. Dollar bulls on the defensive and offering foundational support to non-yielding bullion. Analyzing the foreign exchange reaction, economists at DBS Group Research noted that the inflation readings did little to break the U.S. Dollar Index (DXY) out of its established 99.4–100.1 trading range. However, DBS emphasized that the softer economic releases have significantly reshaped the monetary policy outlook, with money markets slashing the probability of a September Fed rate hike to 40% overnight—down from 72% at the end of July—driven by the combined impact of July's negative Nonfarm Payrolls reading and decelerating CPI figures. This shift was further compounded by mixed commentary from influential Federal Open Market Committee (FOMC) members, forcing traders to scale back expectations for near-term policy tightening. Chicago Fed President Austan Goolsbee urged policy patience, suggesting that recent price spikes were largely driven by transitory tariff and energy dynamics rather than structural domestic demand. In contrast, Cleveland Fed President Beth Hammack maintained a hawkish stance, arguing that disinflationary progress remains inadequate and that further rate increases may still be required to secure price stability over the medium term. Despite this divergence among policymakers, Fed funds futures currently reflect a 65% probability of a rate hike before year-end, down sharply from nearly 85% a week earlier. Offsetting this dovish monetary shift, however, is a strong geopolitical risk premium that continues to support the U.S. Dollar and limit gold's downside. Treasury Secretary Scott Bessent warned that the U.S. is preparing unprecedented economic measures against Iran, while IRGC adviser Mohammad Reza Naqdi signaled Tehran's intent to make any military conflict extraordinarily costly for Washington. These tensions are further amplified by maritime disputes over the Strait of Hormuz, where competing claims of operational control persist, as well as escalations by Iran-backed Houthi forces in the Red Sea and Bab el-Mandeb Strait, including drone strikes against Saudi Aramco refining facilities. This heightened war-risk premium keeps crude oil elevated and preserves safe-haven flows into the dollar, creating a balanced fundamental tug-of-war for gold as traders await incoming U.S. Retail Sales and University of Michigan Consumer Sentiment data. From a technical chart perspective on the 4-hour timeframe, XAU/USD maintains an intact macro uptrend, holding securely above its 200-period Exponential Moving Average (EMA) and a dense cluster of Fibonacci support levels. However, short-term momentum has visibly softened, with the MACD line slipping below zero and its signal line while the 14-period RSI hovers near 42, pointing to a temporary fading of bullish momentum. Immediate downside defense sits at the 38.2% Fibonacci retracement level of $4,285, followed by deeper structural floors at the 50.0% midpoint of $4,234 and the 61.8% golden ratio at $4,184, where the 200-period EMA provides dynamic reinforcement. To re-establish the dominant bullish trajectory, buyers must clear initial resistance at the 23.6% Fibonacci retracement of $4,347, which would reopen the path toward the cycle high anchor at $4,448.40 and higher structural barriers.