Gold rallies as U.S. PPI inflation cools and the Dollar stays under pressure

Gold (XAU/USD) continued its ascent on Thursday, benefiting from a weakening U.S. Dollar, softer-than-expected inflation data, and escalating geopolitical risks. With prices hovering near the $3,380 level, the precious metal remains firmly supported by safe-haven demand.

The latest U.S. Producer Price Index (PPI) report confirmed a slowdown in wholesale inflation. Headline PPI rose 2.6% year-over-year in May, matching forecasts and up slightly from April’s 2.5%. Meanwhile, Core PPI, which excludes food and energy, eased to 3% from 3.2%, reinforcing the trend seen in Wednesday’s downside surprise in the Consumer Price Index (CPI) data. The combination of CPI and PPI results has strengthened expectations that the Federal Reserve may cut interest rates as early as September.

Geopolitical tensions are adding further fuel to gold’s rally. Reports indicate that Israel is considering a military strike on Iran in the coming days, according to NBC News, citing multiple sources. In response to the rising risks in the region, President Donald Trump confirmed that U.S. personnel are being withdrawn from certain areas in the Middle East, just ahead of the sixth round of U.S.-Iran nuclear talks scheduled for this weekend.

Adding to the market's cautious tone, Trump reignited trade concerns by declaring that the U.S. will unilaterally set terms for new tariffs unless trade partners strike a deal before the July 9 deadline. “We will be sending out letters over the next weeks telling them what the deal is,” he told Bloomberg, undermining optimism from the recent U.S.–China ‘trade truce.’

In this risk-off environment, gold continues to benefit as investors seek safety from both economic and geopolitical uncertainty.

Gold Daily Digest: Inflation Data, Fed Rate Bets, and Central Bank Gold Holdings Drive Market Sentiment

Gold (XAU/USD) continues to trade with a bullish bias as a combination of softer U.S. inflation data, shifting Federal Reserve rate expectations, and strong central bank demand fuels upside momentum.
For the Federal Reserve, easing inflation has opened the door to potential rate cuts, which have weighed on U.S. Treasury yields and the Dollar—both supportive factors for Gold. Prior to Wednesday’s Consumer Price Index (CPI) report, the CME FedWatch Tool indicated a 30% probability of the Fed keeping rates at 4.25%–4.50% in September. Post-release, that probability has dropped to 21%, while the likelihood of a 25-basis-point cut has climbed to 57%.
Adding further support to the precious metal, the European Central Bank (ECB) released its annual Monetary Euro report on Wednesday, revealing that global central bank Gold reserves stand at 36,000 tonnes—approaching the highest levels seen since the Bretton Woods era. Continued accumulation of Gold by central banks is expected to provide a stabilizing effect on prices in the near term.

Technical Outlook: Gold Bulls Eye $3,400, April High Back in Focus

Technically, Gold is pushing higher after clearing the key resistance area near $3,380, currently trading around $3,390. This level coincides with the upper boundary of a rising wedge formation visible on the daily chart, which began to take shape following a rebound from mid-May lows near $3,320.

A sustained break above this zone could open the path toward last week’s high near the psychological $3,400 mark. Should momentum continue, the all-time high (ATH) from April around $3,500 may come back into play.

The Relative Strength Index (RSI) on the daily chart sits at 59 and is pointing upward, signaling bullish momentum. On the downside, immediate support lies at the $3,350 psychological level, which has held firm throughout the week. Below that, the 23.6% Fibonacci retracement of the January–April rally, near $3,291, serves as the next key level.

For bearish pressure to take hold, a break below $3,291 would be needed, potentially exposing the next major support around $3,200.

Gold (XAU/USD) daily chart