Gold price shows slight uptrend as US CPI and PPI data approaches

• Gold price edges higher on Wednesday amid the softer USD.
• The growth in gold demand and geopolitical tensions lift the price of precious metals.
• The US CPI and PPI data on Wednesday could offer some hints about the Fed’s monetary policy path.

The gold price (XAU/USD) posts modest gains on the weaker US Dollar (USD) on Wednesday. The rising gold demand from robust over-the-counter (OTC) market investments, consistent central bank purchases, and safe-haven flows amid Middle East geopolitical risk act as a tailwind for XAU/USD. Nonetheless, the Federal Reserve (Fed) officials’ hawkish remarks, including Chairman Jerome Powell’s suggestion to keep interest rates higher for longer, might drag the yellow metal lower in the near term.

Later on Wednesday, the US Consumer Price Index (CPI) for April will be released, and it could offer insights into the timing of the Fed’s initial rate adjustment. Also, the Retail Sales for April will be published, providing insight into consumer spending trends. The hotter-than-estimated inflation data could lead the Fed to a more aggressive stance, boosting the Greenback and exerting some selling pressure on USD-denominated gold.

Daily Digest Market Movers: Gold price gains momentum amid gold investment demand

• The US Producer Price Index (PPI) rose 2.2% YoY in April, surpassing expectations. The Core PPI also saw an increase, suggesting inflation pressure.
• Fed Chair Jerome Powell’s comments on inflation and rates reflected a cautious approach, considering the PPI data and the need for potential rate hikes.
• Kansas City Fed President Jeffrey Schmid emphasized concerns about high inflation and the central bank’s ongoing efforts.
• Projections indicate a slight easing in both headline CPI and Core CPI inflation rates for April.
• US Retail Sales data for April might show a moderate decline, indicating possible shifts in consumer behavior.
• Market expectations point to a likelihood of rate adjustments by the Fed in the future.
• Global gold demand continues to rise despite market fluctuations, showcasing the metal’s resilience as an investment option.

Technical Analysis: Gold price holds a constructive picture

The gold price maintains a positive trajectory on the day, supported by key technical indicators. With the RSI signaling bullish momentum and price action above the 100-period EMA, XAU/USD remains in a favorable position for further upside potential.

A breakout above recent highs could pave the way for a sustained rally towards significant resistance levels, with $2,400 and $2,432 as key targets to watch. Conversely, a pullback to essential support at $2,325–$2,330 may indicate a temporary pause in the upward trend, followed by potential further downside towards $2,300 and $2,281 levels.