Gold Price Forecast: XAU/USD drifts higher to near $3,350 on rising Fed rate cut bets

• Gold price edges higher to around $3,350 in Wednesday's early Asian session. 
• Investors grow more confident about Fed interest rate cuts ahead, supporting the Gold price. 
• Easing trade tensions between the US and China might cap the upside for XAU/USD. 

The Gold price (XAU/USD) gains ground to near $3,350 during the early Asian session on Wednesday. The precious metal rebounds after bouncing off multi-day troughs around $3,330 amid the likelihood of a Federal Reserve (Fed) rate cut in September. Fed officials are scheduled to speak later on Wednesday, including Austan Goolsbee and Raphael Bostic.

The US Consumer Price Index (CPI) came in line with expectations, rising 2.7% on a yearly basis in July, the US Bureau of Labor Statistics (BLS) revealed on Tuesday. The annual core CPI climbed by 3.1% in July, compared to the 2.9% rise recorded in June and above the market consensus of 3%. On a monthly basis, the CPI and the core CPI rose by 0.2% and 0.3%, respectively, besting the estimates. 

Traders increased the implied chance for a Fed September move following the CPI release and also put the odds of another reduction in October at about 67%, up from 55% the day before, according to the CME FedWatch tool. Rising expectations of Fed rate cuts might weigh on the Greenback and underpin the USD-denominated commodity price. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding yellow metal. 

On the other hand, progress on the trade front might cap the upside for the yellow metal, a traditional safe-haven asset. US President Donald Trump on Monday agreed to delay implementing sweeping tariffs on China, extending another 90 days just hours before the last agreement between the world's two largest economies was due to expire.