Gold prices fluctuated lower on Monday (August 11), falling over 1% as signs of easing tensions in Ukraine dampened safe-haven buying. Silver prices also weakened. This pullback followed last Friday's sharp volatility, when tariff policy confusion pushed futures prices to a new high before reversing course. However, spot gold has remained hovering around the $3,400 mark, a level that has become a key resistance level ahead of the release of US Consumer Price Index (CPI) data on Tuesday (August 12). Although last week's gains have largely been reversed, it's too early to declare a bearish cycle in gold, as the market still widely expects multiple interest rate cuts from the Federal Reserve this year. Further technical support is needed for a definitive conclusion.



Gold Price Outlook: Expectations of a ceasefire in Ukraine weigh on gold prices

Monday's decline means the precious metal has retraced nearly all of its gains from the previous week. Despite aggressive risk appetite driving global stock indices sharply higher, some reaching record highs, gold demand remained resilient due to a weak dollar and supportive economic data. However, this week, gold investors began to reassess their holdings following Trump's announcement that he would meet with Putin in Alaska on August 15th to discuss a possible end to the war. While Monday's decline is significant, gold prices remain range-bound. Downside remains limited due to ongoing trade uncertainty and market expectations of two or three Federal Reserve rate cuts later this year, starting in September.

This week, the market's focus is on US inflation data

Looking ahead, key US inflation and retail sales data will be released this week, and any significant surprises could impact gold prices. CPI will be released today, followed by PPI on Thursday. Friday, market focus will shift to the University of Michigan's Inflation Expectations Survey, along with Michigan Consumer Confidence, retail sales, the New York Fed's manufacturing index, and industrial production data.

While the Federal Reserve's dual mandate includes achieving maximum employment, another key objective is maintaining price stability, specifically keeping inflation around its 2% long-term target. As market concerns about the inflation outlook grow—partly due to the potential inflationary effects of Trump's tariffs—investors are closely watching whether businesses begin to pass on higher costs to consumers. The fact that CPI figures have consistently fallen short of expectations over the past five months suggests this pass-through has yet to occur, but could this trend change?

The upcoming PPI report is also crucial, as it feeds into the Federal Reserve's preferred inflation measure, the core PCE price index. While Friday's University of Michigan report on inflation expectations is likely to draw attention, retail sales data remains the primary focus. A combination of weak consumer spending and stronger inflation could heighten concerns about stagflation.

Possibility of a Fed rate cut in September

A recent string of weaker-than-expected employment data has rekindled market expectations that the Federal Reserve may be forced to initiate rate cuts as early as September, with further action possible in October. The December meeting is currently viewed as uncertain. Additional pressure on the US dollar has come from weak ISM services and manufacturing PMI data, as well as rising initial jobless claims. Several Fed officials have recently acknowledged the possibility of multiple rate cuts this year, despite persistent inflation risks, signaling a shift in policy direction. This expectation continues to provide strong support for gold prices despite the sharp stock market rally.

Technical Analysis


(Spot gold daily chart, source: Yihuitong)

Gold has formed a clear bearish trend line connecting the April high ($3,500), June high ($3,451), and July high ($3,439). Gold prices tested around $3,400 last Friday and again at the Asian open overnight, but the trend line remains valid. We still need to see lower lows to establish a short-term top before confirming a bearish cycle. However, given the current high price and stalled upward momentum, any bearish signals should not be underestimated.

If this trend line is broken this week and the gold price stands above the resistance level of $3,400, it may open up upside space for spot gold to set a new historical high.

The current initial support is around $3,335, and the next support is at $3,300. If the gold price closes below $3,300 in the next few days, it may further fall to the June low of $3,248, at which time the market balance may tilt towards the bears.

At 10:32 Beijing time, spot gold was trading at $3,353.96 per ounce.