Gold Prices Dip but Uptrend Structure Remains Intact
Gold prices edged lower on Thursday as traders reacted to hotter-than-expected U.S. inflation data and a sudden rise in jobless claims. Despite the dip, the overall uptrend in gold remains intact, with prices holding above crucial support levels and hopes of a Federal Reserve rate cut fueling bullish sentiment.
- Spot gold (XAU/USD) was trading around $3,623.93, down 0.46% in early U.S. session.
- Immediate resistance: $3,674.70
- Immediate support: $3,593.22
- Trend-defining 50-day moving average: $3,395.20
Market participants are closely watching if gold prices will sustain above the $3,593.22 support zone. A breakdown below this key level could trigger a deeper pullback toward $3,500.20–$3,493.13.
CPI Beats Forecasts, Raising Inflation Concerns
U.S. Inflation Shows Signs of Stickiness
Fresh data showed that the Consumer Price Index (CPI) for August rose by 0.4% month-on-month, double the prior month’s pace. On a year-on-year basis, CPI held at 2.9%, slightly above market expectations.
- Rising energy and shelter costs contributed to the upside surprise.
- Core CPI also remained elevated, suggesting inflation pressures are persistent.
This hotter-than-expected inflation print has complicated the outlook for the Federal Reserve’s upcoming policy decision scheduled for September 16–17. Higher inflation reduces the Fed’s room to cut rates aggressively, which typically weighs on non-yielding assets like gold.
Jobless Claims Surge, Labor Market Weakens
Signs of Cracks Emerging in U.S. Labor Market
Alongside the CPI report, the U.S. Labor Department reported that initial jobless claims surged by 27,000 to 263,000 last week, far above the 235,000 estimate.
- This marks the highest jobless claims figure in nearly two months.
- The unexpected rise suggests softening labor market conditions.
A weakening job market often prompts the Fed to adopt a more dovish policy stance, which can support gold prices by pushing down Treasury yields and the U.S. dollar.
Treasury Yields Swing After Data Release
The bond market witnessed sharp swings following the data dump. Treasury yields initially rose on the stronger CPI reading but pulled back as jobless claims spiked, reflecting investor uncertainty.
- Lower yields typically make gold more attractive, as they reduce the opportunity cost of holding the non-interest-bearing metal.
- The mixed signals from inflation and labor data have created a volatile trading environment for gold investors.
Technical Analysis: Gold Holds Above Key Support
Buy-the-Dip Strategy Still Dominates Market Sentiment
Despite Thursday’s pullback, technical indicators continue to support a bullish view on gold:
- Immediate support: $3,593.22
- Major support zone: $3,500.20–$3,493.13
- Key trend support: 50-day moving average at $3,395.20
As long as prices remain above $3,593.22, buy-the-dip traders are likely to step in, limiting downside risks. A breakdown below this level, however, could open the door for a steeper correction toward the $3,500 zone.
Market analysts also highlight that momentum indicators remain neutral-to-bullish, and volume activity suggests accumulation on dips rather than panic selling.
Fed Rate Cut Hopes Continue to Support Gold
Traders Expect Policy Easing Despite CPI Surprise
While the hotter CPI has sparked doubts about near-term rate cuts, most traders still expect the Fed to signal policy easing soon as the labor market weakens and economic growth slows.
- Lower interest rates reduce the opportunity cost of holding gold.
- Rate cut expectations have been a major tailwind for gold prices in recent weeks.
- A dovish tone from the Fed could spark a renewed rally toward the $3,700 level.
This macroeconomic backdrop continues to underpin gold’s bullish structure, even as short-term volatility persists.
What to Watch Ahead of the Fed Decision
Investors will closely watch the upcoming Federal Open Market Committee (FOMC) meeting for:
- Updated economic projections and interest rate forecasts
- Fed Chair Jerome Powell’s commentary on inflation and labor data
- Any hints on the timing and pace of future rate cuts
A hawkish surprise could pressure gold in the near term, while a dovish outcome could propel prices to new highs.
Gold Market Outlook: Bullish Bias Intact Despite Volatility
Key Takeaways for Investors
Despite the latest dip, analysts maintain a positive medium-term outlook on gold prices:
- Short-term pressure from strong CPI data is likely temporary.
- Weakening labor market could push the Fed toward rate cuts, supporting gold.
- Key support at $3,593.22 remains critical for maintaining the uptrend.
- Long-term technicals and fundamentals favor continued upside.
Investors are advised to monitor the $3,593.22 support level closely. As long as this level holds, buying on dips remains the preferred strategy among institutional traders and hedge funds.
Conclusion: Gold Bulls Eye Fed for Fresh Catalysts
Gold prices are navigating a delicate balance between inflation fears and labor market weakness ahead of the crucial Fed policy meeting. While higher CPI has clouded the immediate outlook, the overall bullish trend in gold remains intact thanks to dovish policy expectations and strong technical support levels.
Until the Fed offers clarity, the buy-the-dip approach is likely to dominate gold market sentiment, with key levels at $3,593.22 (support) and $3,674.70 (resistance) guiding near-term price action.
