Gold Price Holds Modest Gains as Traders Eye US CPI and Fed Rate Outlook

Gold Price Edges Higher as Rate Cut Hopes Weigh on USD

The Gold price (XAU/USD) posts modest intraday gains in early European trading on Tuesday, recovering slightly after dipping to a one-week low overnight. Investors are cautiously optimistic, with the precious metal supported by expectations of a Federal Reserve interest rate cut in September and a softer US Dollar (USD).

With the spotlight on the US Consumer Price Index (CPI) data for July—due later today—market participants are reluctant to take aggressive positions. This data will likely shape the outlook for Fed monetary policy, influencing both interest rates and dollar demand, which are key drivers of the non-yielding yellow metal.

Cautious Optimism Ahead of US CPI and Geopolitical Talks

Growing conviction that the Fed may lower rates has kept the USD bulls on the back foot, providing some tailwinds for Gold. According to CME FedWatch data, markets are pricing in a strong probability of a rate cut in September, with further easing possible into year-end.

However, improving global sentiment—including renewed hope for an extension of the US-China trade truce and the upcoming US-Russia summit aimed at resolving the war in Ukraine—has reduced demand for traditional safe-haven assets like Gold. This suggests limited upside potential for the XAU/USD pair unless inflation data significantly underperforms expectations.

Technical and Sentiment Check

While the short-term bias remains slightly bullish, analysts advise caution due to positive risk appetite across broader financial markets. A hot CPI reading could reverse rate cut expectations and trigger a pullback in Gold, while a softer print may push prices higher.

For now, $1,930–$1,950 levels remain the key resistance zone, while support is seen near the recent low around $1,910.