Gold holds near two-week low ahead of US Retail Sales data

• Gold rebounds modestly on Friday, supported by a softer US Dollar, but stays near a two-week low as rising Treasury yields cap gains.
• Markets eye the Trump-Putin summit in Alaska and key US data releases, including US Retail Sales and the University of Michigan Consumer Sentiment Index.
• The technical setup stays bearish, with XAU/USD struggling below $3,350 and momentum indicators pointing to mild downside pressure.

Gold (XAU/USD) rebounds modestly on Friday, supported by a softer US Dollar (USD), though the recovery remains shallow with prices pinned near a two-week low.

The precious metal is drawing mild bids as investors tread cautiously ahead of the high-stakes US-Russia summit in Alaska. However, a rise in US Treasury yields is capping gains, with stronger-than-expected US Producer Price Index (PPI) data reviving inflation concerns and reducing expectations of large interest rate cuts by the Federal Reserve (Fed), limiting the appeal of non-yielding bullion.

At the time of writing, the metal is trading around $3,343 during the European session, struggling to decisively break above the $3,350 resistance zone.

The limited momentum follows Thursday's drop of over 0.50% to near $3,330, as stronger US inflation data boosted Treasury yields and the US Dollar, weighing on Gold.

Geopolitical risk remains in focus as US President Donald Trump and Russian President Vladimir Putin meet in Anchorage to negotiate a potential Ukraine ceasefire. While markets are not yet showing a significant safe-haven bid, traders remain alert to any developments that could escalate tensions or derail peace efforts. Any breakdown in talks could quickly shift sentiment in Gold's favor, whereas signs of progress toward peace may weigh on the metal.

Before that, traders' attention turns to a slate of key US data releases later on Friday, including Retail Sales, the NY Empire State Manufacturing Index, and the preliminary Michigan Consumer Sentiment Index for August. The figures could inject fresh volatility into Gold prices, with stronger readings likely to bolster the US Dollar and weigh on bullion, while weaker readings may offer the metal a near-term lift.

Market movers: US inflation and yields climb, China growth slows

• The US Dollar Index (DXY), which measures the Greenback's value against a basket of six major currencies, is edging lower near 97.90 after Thursday's rebound. The gauge gained nearly 0.40% in the previous session, supported by hot US producer inflation data, signaling that companies are passing higher import costs from tariffs onto consumers.
• US Treasury yields rebounded across the curve on Thursday, with the benchmark 10-year climbing about 5 basis points to last trade near 4.293%. The 30-year yield is holding around 4.884%.
• Risk sentiment had been buoyed earlier in the week by expectations of US monetary easing, with markets fully pricing in a 25 basis-point rate cut in September. However, with US wholesale inflation accelerating in July at the fastest pace in three years, traders have trimmed those odds to about 90%, according to the CME FedWatch Tool.
• July's US Producer Price Index surged 0.9% MoM -- the largest increase since June 2022 -- lifting the annual rate to 3.3%. Core PPI, which excludes food and energy, also jumped 0.9% MoM, pushing the yearly rate to 3.7%. Both readings came in well above expectations.
• Federal Reserve Bank of St.Louis President Alberto Musalem said on Thursday that he expects most of the impact of tariffs on inflation to fade within 6 to 9 months, though it could prove more persistent. He noted that tariffs are feeding through to inflation, and that he has revised his view of labor market risks slightly higher and inflation risks slightly lower. Musalem added that a half-point rate cut is not supported by the current state of the economy or the data.
• Next week's Jackson Hole Economic Policy Symposium in Wyoming will be closely watched, with Fed Chair Jerome Powell set to speak on August 22. Investors will be listening for his take on the economic outlook and potential policy adjustments, seeking clues on the pace and scale of future interest rate moves amid persistent inflation and shifting market expectations.
• China's July Industrial Production grew 5.7% YoY in July, down from 6.8% in June and below market expectations for a 5.9% increase. Retail Sales also disappointed, rising 3.7% YoY in July, missing forecasts of 4.6% and slowing from 4.8% in June, underscoring cooling domestic demand in the world's largest Gold consumer and potentially tempering the medium-term outlook for physical demand.
• US Retail Sales data for July, due at 12:30 GMT, is expected to show a 0.5% monthly rise after June's 0.6% gain. Core sales excluding autos are seen increasing 0.3% following a 0.5% advance in the prior month.
• Industrial production is projected to be flat in July after a 0.3% gain in June, while the preliminary August reading of the University of Michigan's Consumer Sentiment Index is seen edging up to 62 from 61.7. The expectations component is forecast to dip to 56.5 from 57.7, highlighting potential caution among households about the economic outlook.

Technical analysis: XAU/USD struggles below $3,350 amid weak momentum

Gold (XAU/USD) remains under pressure on the 4-hour chart, hovering near the $3,340 mark and struggling to break above the 21-period SMA at $3,350.

Price action is just above the immediate support at $3,330, which aligns with the lower bound of the recent consolidation zone. A decisive break below $3,330 could expose the next downside target at the psychological $3,300 level.

On the upside, the $3,350-$3,355 region is the first barrier, with stronger resistance seen at $3,370, where the 50-period SMA at $3,367 converges with the recent swing high. A sustained move above this level would open the way toward the $3,400 psychological mark.

Momentum indicators show a bearish bias. The Relative Strength Index (RSI) is hovering around 40, signaling mild bearish momentum but no strong conviction. The Average Directional Index (ADX) is subdued at 18.7, indicating a lack of strong trend momentum. The Moving Average Convergence Divergence (MACD) remains in negative territory, with the signal line above the MACD line and muted red histogram bars, pointing to mild downside pressure.

Overall, the technical setup suggests that unless Gold reclaims the $3,350-$3,355 zone, the path of least resistance remains to the downside toward $3,325 and $3,300.