Gold Holds Near Record Highs as US Inflation Data Boosts Rate Cut Hopes

Gold prices eased to approximately $2,460 per ounce on Wednesday, and remained near record highs, as softer US inflation data heightened expectations for a more significant Federal Reserve rate cut 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 safe-haven appeal continues to support its value amid escalating geopolitical tensions, including potential retaliatory actions by Iran against Israel and Ukraine's actions in Russia. Investors are awaiting the release of US CPI data later in the day for further insights into inflation trends. The CME FedWatch Tool currently 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 such as 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.