Gold steadies near $3,350 as traders await US inflation data

• Gold hovers below $3,350 on Tuesday after falling nearly 1.6% on Monday to its lowest level in a week.
• Monday's sell-off was driven by optimism over potential Russia-Ukraine peace talks.
• Traders remain on the sidelines ahead of the July CPI release, with the data expected to be a key catalyst.

Gold (XAU/USD) steadies on Tuesday after slipping to a one-week low on the previous day. At the time of writing, the precious metal is consolidating near $3,345 during European trading hours, with investors awaiting the release of the US inflation data at 12:30 GMT for fresh monetary policy cues.

The metal showed signs of stabilization after US President Donald Trump announced on Monday, via his social media platform Truth Social, that Gold imports would be exempt from new US tariffs.

The proposed tariffs could have applied to widely traded Swiss Gold bars, including 1-kilogram and 100-ounce bars, creating uncertainty in the bullion market and raising concerns over potential supply chain disruptions. The clarification eased market jitters, but investors are still awaiting a formal executive order to definitively clarify the administration's tariff policy.

Attention now turns to the US Consumer Price Index (CPI) data for July, which will be watched closely for signs that new tariffs are starting to filter through to inflation. Headline CPI is expected to increase 0.2% MoM, easing from 0.3% in June. On an annual basis, the inflation rate is expected to have accelerated for a third consecutive month to 2.8% from 2.7% in June.

Core CPI, which excludes food and energy -- a key measure of core inflation -- is expected to show a 0.3% monthly increase, up from 0.2% in June, while the annual core rate is forecast at 3%, up slightly from 2.9%.

Market movers: CPI in focus as US-China tariff truce eases tensions

• On Monday, Gold prices dropped more than $50 -- about 1.6% -- to just over $3,340 per troy ounce. The fall came after markets reacted to hopes for progress in easing Russia-Ukraine tensions. US President Donald Trump will meet Russian President Vladimir Putin in Alaska on Friday to negotiate an end to the war in Ukraine.
• Softer US Dollar and subdued Treasury yields ahead of the inflation data are offering modest support to the precious metal. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is little changed on the day, hovering around 98.50. US Treasury yields are also steady, with the benchmark 10-year note yielding around 4.285% and the 30-year bond near 4.854%.
• The upcoming inflation data will also provide clarity on the Federal Reserve's (Fed) monetary policy path. Despite lingering inflation pressures, markets are pricing in high odds of an interest rate cut in September, supported by softer labor market data in July. A hotter-than-expected CPI reading could temper expectations for imminent rate cuts, boosting the US Dollar and weighing on Gold. Conversely, softer figures may strengthen dovish bets, limiting upside in the Greenback and supporting the precious metal.
• According to the CME FedWatch Tool, the probability of a 25-basis-point rate cut in September has eased to around 84%, down from approximately 90% a week ago. This shift reflects caution ahead of inflation data, with CPI projected to remain well above the Fed's 2% target and limiting the scope for near-term easing.
• On the trade front, sentiment improved after US President Donald Trump signed an order extending the US-China tariff truce by another 90 days, moving the next review to November 9. This delay eases pressure on global supply chains and calms near-term trade tensions. Still, traders are cautious, viewing the move as a short pause rather than real progress toward ending the trade dispute.
• Looking ahead, remarks from Fed officials Thomas Barkin and Jeffrey Schmid later on Tuesday will be in focus for any policy hints. The US economic calendar will feature the Producer Price Index (PPI) on Thursday, followed by Retail Sales and the preliminary August reading of the Michigan Consumer Sentiment Index on Friday. These releases will be closely monitored for further signals on inflation trends and could play a key role in shaping expectations for a potential rate cut in September.

Technical analysis: XAU/USD holds below key moving averages ahead of CPI

Gold (XAU/USD) has been consolidating in a well-defined horizontal range between $3,450 and $3,250 since mid-April, after peaking at an all-time high of $3,500 earlier that month.

Price action on the 4-hour chart shows repeated failures to sustain gains above the $3,400 psychological barrier, with the most recent rejection last week reinforcing this level as a strong supply zone.

The 21-period SMA ($3,377) has begun to slope lower and is showing early signs of converging with the 50-period SMA ($3,363), reflecting waning upside momentum. With price trading below both moving averages, the short-term bias remains tilted to the downside unless a soft US CPI print sparks a rebound.

The Relative Strength Index (RSI) is hovering around 37, pointing to growing downside momentum but not yet in oversold territory, leaving room for further declines. The Moving Average Convergence Divergence (MACD) indicator remains in negative territory, with both the MACD line and signal line below zero, accompanied by a bearish crossover, confirming the momentum shift toward sellers.

Immediate resistance is seen at $3,363 (50-SMA), followed by $3,377 (21-SMA) and the $3,400 psychological barrier. On the downside, initial support lies at $3,330-$3,320, with a break below exposing the range floor at $3,250. Further weakness could bring the next major support at $3,000 into focus.