Gold Prices Hold Firm Ahead of US Inflation Report

On Wednesday, gold prices held steady at around $2,520 per ounce as investors awaited the US inflation report later in the day for indications of the Federal Reserve’s potential rate cut. The previous week’s jobs report offered limited clarity, showing fewer job additions than expected while the unemployment rate edged lower. The annual inflation rate in the US is projected to decelerate for a fifth consecutive month to 2.6% in August, down from 2.9% in July, with the monthly inflation rate expected to hold steady at 0.2%. Market expectations now indicate a 67% probability of a 25 basis point rate cut at next week’s Fed meeting, with a 33% chance of a 50 basis point reduction, according to the CME FedWatch tool. A less restrictive monetary policy tends to benefit gold by lowering the opportunity cost of holding non-interest-bearing assets. Additionally, traders are keeping a close eye on the first debate between US presidential candidates Kamala Harris and Donald Trump in anticipation of the November election.

Technically the first support level is at 2,510. If this level is breached, the next supports to watch will be 2,495 and 2,470. On the upside, the initial resistance is at 2,530; if this level is surpassed, the next targets will be 2,550 and 2,585.