Gold (XAU/USD) is trading with a softer tone under the $3,650 mark on Thursday, lacking clear direction but still holding above familiar support zones. A spike in US Jobless Claims weakened the US Dollar, helping the yellow metal limit losses even as the August CPI report came in slightly hotter than markets had anticipated.
From a technical standpoint, the daily RSI remains deep in overbought territory, signalling that Gold may be due for some short-term consolidation or even a corrective pullback. Immediate support lies near the $3,620 intraday low, with stronger demand expected around the $3,600 psychological handle and the weekly low at $3,580. A decisive break below these levels could open the door toward the $3,565–$3,560 zone, before exposing last week’s trough around $3,510.
On the upside, resistance is now seen at the Asian session top near $3,649 and the overnight swing high at $3,657–$3,658. A sustained break above these barriers could trigger a retest of the record peak at $3,675. Beyond that, bulls may eye the $3,700 milestone, though profit-taking around this key level could act as a temporary ceiling.
Fundamental Drivers
Despite signs of a pullback, the broader backdrop remains supportive for Gold. Markets are almost certain the Federal Reserve will cut rates at its meeting next week, which should cap USD recovery and continue to underpin the non-yielding metal. At the same time, lingering trade frictions, geopolitical risks, and political uncertainty in France and Japan add to safe-haven demand.
US data this week reinforced those expectations. The Producer Price Index (PPI) dropped to 2.6% YoY in August, down from 3.3% previously, while core PPI slowed to 2.8% from 3.7%. Softer producer prices, alongside a weaker labour market, suggest waning domestic demand. This strengthens the case for Fed easing, with traders now betting on three rate cuts before year-end and even pricing in a slim chance of a larger cut in September.
On the geopolitical front, tensions remain elevated. Reports confirm Poland intercepted Russian drones in its airspace, marking the first direct NATO involvement in such an incident. Meanwhile, former US President Donald Trump has pressed the EU to impose harsher tariffs on China and India as part of his strategy to pressure Russia. Rising risks from these developments could lend additional safe-haven support to Gold, limiting the downside even if momentum stalls.
Gold is consolidating below $3,650, with near-term risks tilted toward a pullback, but strong fundamentals dovish Fed expectations and heightened geopolitical tensions suggest downside is likely to remain limited.
