Gold pulls back from two‑month high as traders await US PPI data

Spot gold fell 0.5 % to $4,383.53 per ounce, erasing most of the 1 % rally that had taken it to a two‑month high earlier in the session, as market participants paused for the US producer‑price index (PPI) release [1].

What drove the move

The rally to $4,449 was sparked by a series of softer US inflation readings, including a CPI that came in at 3.4 % YoY—down from 3.5 % the month before—and weaker non‑farm payrolls for July [1]. Those data points lowered the market’s estimate of a September Fed rate hike to about 40 % from roughly 54 % a week earlier, according to the CME FedWatch Tool [1]. With the Fed’s near‑term tightening outlook receding, gold’s non‑yielding appeal was buoyed, pushing the metal up more than 8 % for the month [1].

Market context and technical stance

Despite the pullback, gold remains above its 50‑day simple moving average (SMA) at $4,145 and is trading near the 100‑day SMA at $4,387, while staying well below the 200‑day SMA at $4,502 [4]. The Relative Strength Index sits at 65, still in bullish territory, and the MACD remains positive, indicating that buying pressure persists even as price hovers around key medium‑term support levels [4]. The recent dip appears largely profit‑taking rather than a fundamental reversal, with traders waiting for the July PPI report—headline unchanged, annual rate easing to 4.7 % from 5.5 %—to gauge whether the Fed will hold rates steady [4].

Sentiment and broader forces

Geopolitical tension between the US and Iran adds a safe‑haven premium to gold, but no new diplomatic breakthroughs were reported, keeping the risk backdrop unchanged [1]. Lower US Treasury yields, with the 2‑year yield at 4.14 %—its lowest since mid‑July—have also cushioned gold’s downside, as cheaper yields reduce the opportunity cost of holding the metal [4]. Nonetheless, analysts caution that a hotter PPI reading could revive rate‑hike expectations and reignite dollar strength, capping further gold gains [4].

What to watch

• PPI outcome: A softer-than-expected July PPI could push gold back above $4,400; a hotter reading may pull it toward $4,350.
• Key support levels: $4,145 (50‑day SMA) and $4,000 (psychological floor) if downside pressure intensifies.
• Fed rate‑hike probability: Any shift in the CME FedWatch Tool probability for a September hike will likely move gold sharply.

The pullback underscores how gold’s price is now tightly linked to US inflation data and Fed policy expectations. With the PPI data acting as the next litmus test, the metal’s trajectory will hinge on whether the inflation narrative stays subdued or resurfaces, leaving the near‑term outlook open‑ended.