Gold dips as traders await US CPI data amidst Fed rate cut speculation

• Gold edges lower toward $3,620 as traders turn cautious ahead of the US CPI data release.
• Soft US PPI and weak labor market data keep Fed rate cut bets alive, cushioning Gold's downside.
• XAU/USD is consolidating above short-term support at $3,620 after slipping below the 21-SMA on the 4-hour chart.

Gold (XAU/USD) edges lower on Thursday as investors turn cautious and reposition ahead of the US Consumer Price Index (CPI) data release. At the time of writing, XAU/USD is trading near $3,620, down almost 0.50% on the day, giving back the modest gains seen on Wednesday as a steady US Dollar (USD) caps upside momentum.

Market focus now shifts squarely to the August CPI release due at 12:30 GMT. Economists expect the August inflation data to show a moderate pickup in headline consumer prices.

The headline CPI is forecast to rise 0.3% MoM, up from 0.2% in July, while the annual rate is seen climbing to 2.9% from 2.7%. Core inflation, which excludes food and energy prices, is expected to hold steady at 0.3% and 3.1% on a monthly and yearly basis respectively. Any upside surprise could bolster the USD and Treasury yields, deepening Gold's pullback, while a softer print would reinforce expectations of a Federal Reserve (Fed) interest rate cut at next week's meeting.

Adding to the cautious mood, Wednesday's softer US Producer Price Index (PPI) figures alongside Friday's weak Nonfarm Payrolls (NFP) report, rising Unemployment Rate, and downward revisions in prior job growth have already cemented expectations for a 25-basis-point (bps) Fed rate cut in September. While Gold is under modest pressure ahead of the CPI release, the downside remains limited as easing inflation signals and dovish Fed bets continue to underpin demand for the non-yielding asset.

Market movers: Gold outlook brightens as Fed uncertainty grows

• The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, extends its advance for the third consecutive day after briefly touching a seven-week low earlier in the week. At the time of writing, the index is hovering near 98.00.
• The US PPI for August delivered a significant downside surprise with headline prices contracting at a 0.1% pace MoM against a forecast of 0.3%, while the annual rate eased to 2.6% compared to 3.3% expected. Core PPI also slipped 0.1% on the month, missing the 0.3% forecast, bringing the yearly rate down to 2.8% from an expected 3.5%.
• On Wednesday, the US Senate Banking Committee advanced Stephen Miran's nomination to the Federal Reserve Board in a 13-11 vote, sending it to the full Senate ahead of next week's FOMC meeting. Miran, who also serves on the White House Council of Economic Advisers, is viewed as supportive of quicker rate cuts. However, his dual role has sparked concerns over the Fed's political independence.
• The Trump administration said on Wednesday it will appeal a federal judge's ruling that temporarily blocked US President Donald Trump from firing Fed Governor Lisa Cook. The case stems from allegations predating her confirmation, which the court ruled did not meet the "for cause" standard required under the Federal Reserve Act.
• Major global banks have turned increasingly bullish on Gold. JP Morgan sees prices averaging $3,675 in Q4 and reaching $4,000 by mid-2026, while Goldman Sachs projects a move beyond $3,700 this year with upside risks toward $4,000. Australia and New Zealand Banking Group (ANZ) recently lifted its 2025 forecast to $3,800.
• Alongside CPI data, the US economic docket on Thursday will also feature weekly Initial Jobless Claims, expected at 235K compared with 237K previously. The labor market remains in focus as investors gauge the Fed's monetary easing pace.

Technical analysis: XAU/USD steadies near $3,620 with US CPI in focus

Gold (XAU/USD) is testing short-term support at $3,620 on the four-hour chart after slipping below the 21-period Simple Moving Average (SMA). The yellow metal printed a record high near $3,675 on Tuesday but has lost momentum since then, with Wednesday's attempt to reclaim $3,650 falling short. This leaves immediate resistance at the 21-SMA around $3,634, while the $3,620 area is shaping up as the first line of defense.

A decisive break lower would bring the psychological $3,600 mark into play, followed by stronger support near $3,575, converging with the 50-SMA. On the upside, a recovery above $3,634 would allow bulls to challenge $3,650. A break of that level could pave the way for a retest of the all-time high near $3,675.

A sustained break above that record peak would signal renewed bullish momentum, paving the way toward $3,700 and beyond into uncharted territory.

The Relative Strength Index (RSI) is holding around 53, suggesting consolidation may persist in the near term. Traders are likely to wait for the US CPI release to provide the next directional catalyst.