US CPI data released tonight! 3342 becomes the life and death line for gold bulls and bears
2025-08-12 15:25:17
Gold prices rebounded during the Asian and European trading hours on Tuesday (August 12th), with spot gold rising 0.4% to around $3,357 per ounce. However, the rebound lacked momentum and has now fallen back to around $3,346.82 per ounce, still close to the one-week low reached the previous day. Market expectations generally favor the Federal Reserve to resume its interest rate cut cycle in September, but this expectation limits the dollar's potential for a rebound, which in turn provides some support for gold, an interest-free asset.
However, gold bulls appear reluctant to make significant bets, opting instead to await the latest US inflation data. This crucial data could shed new light on the Federal Reserve's path for rate cuts, in turn impacting demand for the US dollar and providing a substantial boost to gold prices. Meanwhile, the extension of the US-China trade truce and optimistic expectations for a US-Russia summit aimed at ending the war in Ukraine could pose bearish factors for gold.
Gold prices fell sharply on Monday as easing geopolitical tensions weighed on traditional safe-haven assets. Investors were pinning high hopes on Friday's US-Russia summit, believing it would increase the likelihood of an end to the long-running Russia-Ukraine conflict. Furthermore, continued US dollar buying contributed to a roughly 1.65% drop in the precious metal overnight.
Markets are generally betting the Federal Reserve will cut interest rates by 25 basis points in September and at least twice before the end of the year. This expectation has been bolstered by a recent string of disappointing U.S. economic data, including the closely watched non-farm payrolls report, which showed the U.S. economy may be weakening.
However, traders are likely to avoid making big directional bets, opting to wait and see ahead of U.S. inflation data, which could provide more clues about the interest rate outlook.
The US Producer Price Index (PPI) will be released on Thursday, followed by US retail sales data and the Michigan Consumer Confidence Index on Friday. Furthermore, speeches by several key Federal Reserve FOMC officials will also influence the US dollar's short-term trajectory and provide a significant impetus for gold prices.
On the trade front, US President Trump signed an executive order on Monday to extend the US-China trade truce for three months, easing market concerns about a trade war between the world's two largest economies. Earlier, Trump said in a social media post that gold would not be subject to tariffs, but did not provide further details.
Gold bears need to wait for a break below the key support level near 3342
(Spot gold 4-hour chart, source: Yihuitong)
From a technical perspective, the gold price has successfully held the key support level of the 200-period SMA on the 4-hour chart, currently located around the $3,344-3,342 range. Given that the oscillators on this chart are showing downward momentum, a break below this support level could drag gold prices towards the intermediate support level of $3,315 and, subsequently, the $3,300 mark. Any subsequent selling would be seen as a new trigger for short traders and pave the way for further declines in gold prices.
Conversely, a rebound above the $3358-3360 area could face strong resistance near $3380. A sustained breakout above this resistance level would allow gold to revisit the $3400 mark. A further breakout above last week's swing highs of $3409-3410 would reverse the current bearish outlook and push gold towards testing the next key resistance level of $3422-3423. Upward momentum could extend to the strong horizontal resistance of $3434-3435. A clear break above this resistance could challenge the historical peak of $3500 reached in April.
Overall, the gold market is currently caught in a tug-of-war between expectations of monetary policy easing and easing geopolitical risks, with technical indicators showing signs of consolidation and volatility. Investors are advised to focus on this week's inflation data and exercise caution before a breakthrough in key levels.
At 15:23 Beijing time, spot gold was trading at $3346.80 per ounce.
However, gold bulls appear reluctant to make significant bets, opting instead to await the latest US inflation data. This crucial data could shed new light on the Federal Reserve's path for rate cuts, in turn impacting demand for the US dollar and providing a substantial boost to gold prices. Meanwhile, the extension of the US-China trade truce and optimistic expectations for a US-Russia summit aimed at ending the war in Ukraine could pose bearish factors for gold.
Market Dynamics: Gold prices benefit from Fed rate cut bets, while dollar demand is weak
Gold prices fell sharply on Monday as easing geopolitical tensions weighed on traditional safe-haven assets. Investors were pinning high hopes on Friday's US-Russia summit, believing it would increase the likelihood of an end to the long-running Russia-Ukraine conflict. Furthermore, continued US dollar buying contributed to a roughly 1.65% drop in the precious metal overnight.
Markets are generally betting the Federal Reserve will cut interest rates by 25 basis points in September and at least twice before the end of the year. This expectation has been bolstered by a recent string of disappointing U.S. economic data, including the closely watched non-farm payrolls report, which showed the U.S. economy may be weakening.
However, traders are likely to avoid making big directional bets, opting to wait and see ahead of U.S. inflation data, which could provide more clues about the interest rate outlook.
The US Producer Price Index (PPI) will be released on Thursday, followed by US retail sales data and the Michigan Consumer Confidence Index on Friday. Furthermore, speeches by several key Federal Reserve FOMC officials will also influence the US dollar's short-term trajectory and provide a significant impetus for gold prices.
On the trade front, US President Trump signed an executive order on Monday to extend the US-China trade truce for three months, easing market concerns about a trade war between the world's two largest economies. Earlier, Trump said in a social media post that gold would not be subject to tariffs, but did not provide further details.
Gold bears need to wait for a break below the key support level near 3342
(Spot gold 4-hour chart, source: Yihuitong)
From a technical perspective, the gold price has successfully held the key support level of the 200-period SMA on the 4-hour chart, currently located around the $3,344-3,342 range. Given that the oscillators on this chart are showing downward momentum, a break below this support level could drag gold prices towards the intermediate support level of $3,315 and, subsequently, the $3,300 mark. Any subsequent selling would be seen as a new trigger for short traders and pave the way for further declines in gold prices.
Conversely, a rebound above the $3358-3360 area could face strong resistance near $3380. A sustained breakout above this resistance level would allow gold to revisit the $3400 mark. A further breakout above last week's swing highs of $3409-3410 would reverse the current bearish outlook and push gold towards testing the next key resistance level of $3422-3423. Upward momentum could extend to the strong horizontal resistance of $3434-3435. A clear break above this resistance could challenge the historical peak of $3500 reached in April.
Overall, the gold market is currently caught in a tug-of-war between expectations of monetary policy easing and easing geopolitical risks, with technical indicators showing signs of consolidation and volatility. Investors are advised to focus on this week's inflation data and exercise caution before a breakthrough in key levels.
At 15:23 Beijing time, spot gold was trading at $3346.80 per ounce.
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- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
