Gold prices rallied modestly on Wednesday, gaining 0.97% amid signs of easing inflation in the United States. The softer Consumer Price Index (CPI) data for May fueled investor optimism that the Federal Reserve (Fed) might resume interest rate cuts in September. The XAU/USD pair traded near $3,363, reaching an intraday peak around $3,360 before slightly retreating.
US-China Trade Talks Add to Bullion’s Safe-Haven Appeal
Lingering uncertainty around US-China trade negotiations continues to support gold demand. US Commerce Secretary Howard Lutnick confirmed a framework agreement aligned with the Geneva Consensus, pending final approval from Presidents Donald Trump and Xi Jinping. Chinese Vice Commerce Minister Li Chenggang described the talks as “rational and candid,” expressing hope that progress will build trust between the two nations.
Focus Shifts to Producer Price Index and Jobs Data
Market attention is now turning to the upcoming US Producer Price Index (PPI) release and employment figures. Recent ISM Purchasing Managers Index (PMI) data indicated rising input costs for businesses, suggesting that tariff effects may not yet fully reflect in consumer prices despite May’s positive CPI print.
Dollar Weakness and Falling Yields Boost Gold
Gold’s advance was underpinned by a weakening US Dollar and declining Treasury yields. The US Dollar Index (DXY) fell 0.44% to 98.61, hitting four-day lows. The US 10-year Treasury yield dropped five basis points to 4.42%, while real yields fell similarly to 2.13%, making non-yielding gold more attractive.
Geopolitical Risks Maintain Support
Geopolitical tensions persist as President Trump expressed concerns over Iran’s increasing assertiveness in nuclear negotiations. Iranian officials remain hopeful for a swift agreement to ensure the peaceful nature of their nuclear program.
Technical Outlook: Gold Consolidates Below $3,400
Technically, gold remains biased to the upside but faces resistance near $3,400, with the Relative Strength Index (RSI) flattening near neutral—signaling consolidation. A break above $3,350 could push prices toward $3,400, $3,450, and the all-time high near $3,500. On the downside, a slip below $3,300 may target support at the 50-day SMA near $3,269 and the April 3 pivot at $3,167.
