Softer US Inflation Data Improves Gold’s Safe-Haven Appeal

Gold eased to around $2,460 per ounce on Wednesday but remained near record highs, as new evidence of softer US inflation increased expectations for a larger interest rate cut by the Federal Reserve in September. Annual producer inflation slowed to 2.2% in July, down from 2.7% in June and approaching the Fed’s 2% target. Additionally, gold’s appeal as a safe-haven asset continues to attract investors amid escalating geopolitical tensions, including Iran’s potential retaliatory actions against Israel and Ukraine’s activities in Russia. Market participants are awaiting the US CPI data later in the day for further clues on inflation. Currently, the CME FedWatch Tool indicates a 50% probability of a 50-basis-point rate cut in September. Lower interest rates typically increase the attractiveness of non-interest-bearing assets like gold.

In gold, the first support level is at 2,450. If this level is breached, the next supports to watch will be 2,430 and 2,412. On the upside, the initial resistance is at 2,475; if this level is surpassed, the next targets will be 2,450 and 2,500.