Gold price rebounds above $3,200 as US PPI and Retail Sales miss estimates

• Gold boosted by April's unexpected PPI drop fuels Fed rate cut speculation.
• Retail Sales slow sharply to 0.1% as tariffs weigh on consumer spending, hinting at broader economic softness.
• Fed rate cut expectations rise to 53 bps for 2025; DXY dips 0.15% to 100.88, supporting Gold recovery.

Gold prices recovered some ground earlier during the North American session after US economic data suggested that factory gate inflation continues to decelerate while consumer spending debilitated due to US tariffs. At the time of writing, the XAU/USD trades at $3,202, up by 0.82%.

XAU/USD gains 0.82% after weaker inflation and spending data revive easing hopes, lifting Bullion off five-week low

After diving to a five-week low of $3,120, the non-yielding metal found bids that pushed Bullion back above $3,200. Data from the United States (US) showed that the Producer Price Index (PPI) in April fell unexpectedly -0.5% MoM, missing an estimate of a 0.2% increase. The core PPI dropped by -0.4%, below forecasts of a 0.3% expansion.

At the same time, Retail Sales for the same period slowed, edging up 0.1% MoM, after March's figures were upwardly revised to 1.7%. Economists had expected the numbers to remain unchanged compared to the previous month.

Initial Jobless Claims for the week ending May 10 rose by 229,000, as expected, unchanged from the previous week.

XAU/USD edged up after the data, and so far, bulls have reclaimed the $3,200 figure, as the Greenback, as measured by the US Dollar Index (DXY), fell 0.15% to 100.88.

Market participants increased their bets that the Federal Reserve would ease policy by 53 basis points (bps) in 2025, up from the 48.5 expected on Wednesday.

The de-escalation of the US-China trade war impacted the price of bullion amid improved risk appetite. Gold fell from around $3,326 to $3,207, resulting in a loss of over $120. However, it has since recovered, as US data reflects a sluggish economy.

Ahead in the week, the US economic docket will feature further Fed speaking and the University of Michigan (UoM) Consumer Sentiment.

XAU/USD Price Forecast: Technical outlook

From a technical standpoint, Gold's bounce could be short-lived if buyers fail to achieve a daily close above $3,200. In that case, they need to surpass the May 14 peak of $3,257 to remain hopeful of testing $3,300 and trimming weekly losses. Nevertheless, momentum favors further downside, as depicted by the Relative Strength Index (RSI). With that in mind, traders should be warned that the ongoing leg-up could be a correction of an ongoing downtrend.

On the flipside, if XAU/USD closed on a daily basis below $3,200, further downside is seen, with the 50-day Simple Moving Average (SMA) at $3,155 seen as the next support level, ahead of $3,100.