Gold holds close to record highs as US Dollar softens on US PPI miss, focus shifts to CPI

NEW YORK (September 10) Gold (XAU/USD) clings to gains on Wednesday after a sharp reversal the previous day, with the metal soaring to an all-time high near $3,675 before retreating to settle at $3,625. At the time of writing, XAU/USD is trading near $3,655, up about 0.80% on the day, extending gains after softer-than-expected US Producer Price Index (PPI) data reinforced bets on a Federal Reserve (Fed) rate cut next week, but offered little justification for a larger rate cut.

The US PPI for August delivered a significant downside surprise. Headline PPI fell 0.1% MoM, while forecasts had pointed to a 0.3% increase, and July’s reading was revised down to 0.7% from 0.9%.On an annual basis, headline inflation eased to 2.6% YoY, below the 3.3% forecast. Core PPI, excluding food and energy, also slipped 0.1% MoM compared to the expected 0.3% gain, while the annual rate slowed sharply to 2.8% from 3.7%.

Thursday’s Consumer Price Index (CPI) release will provide the final inflation checkpoint before the Fed's monetary policy meeting. Although a rate cut next week is widely expected, these figures will help shape expectations for the pace of easing beyond September.

Overall, Gold continues to draw support from a mix of underlying drivers. A broadly weaker US Dollar (USD) is making precious metals more attractive for overseas buyers. Central banks remain steady in their Gold purchases, reinforcing the metal’s role as a strategic asset. Growing trade frictions tied to US tariff policies, combined with persistent geopolitical tensions, are further fueling demand for safe havens. In addition, uncertainty surrounding the Fed’s autonomy amid rising political pressure is adding to investor caution, keeping Gold anchored near historic highs.

Gold Market movers: Looking for inflation cues

• Earlier on Tuesday, the Senate Banking Committee advanced Fed nominee Stephen Miran in a narrow 13-11 party-line vote, sending his nomination to the full Senate. Lawmakers noted that procedural timelines make it unlikely he will be confirmed in time to participate in the next week’s FOMC meeting, though his eventual confirmation would give President Trump another ally on the Fed Board.
• The US Dollar Index (DXY), which measures the Greenback's value against a basket of six major peers, is struggling to extend its rebound from seven-week lows. At the time of writing, the index is edging lower, last seen around 97.60.
• US Treasury yields are also steady across the curve after Tuesday’s mild pullback but remain near multi-month lows. The 10-year note is trading around 4.091%, the 30-year at 4.747%, while the rate-sensitive 2-year yield holds near 3.548%.
• Geopolitical risk remains elevated after Israel carried out an airstrike on Hamas leaders in Doha on Tuesday, killing several officials and a Qatari guard, while Poland intercepted Russian drones that violated its airspace during a large-scale assault on Ukraine in the early hours of Wednesday.
• On Tuesday, the US Supreme Court agreed to an expedited hearing in November to decide whether US President Donald Trump had legal authority to impose sweeping global tariffs. A potential ruling against the measure could force Washington to refund tens of billions of dollars in duties.
• President Trump urged the European Union (EU) on Tuesday to impose tariffs of up to 100% on imports from China and India as part of a broader plan to increase economic pressure on Russia, particularly due to its Oil trade.
• A federal judge has blocked President Trump’s attempt to remove Fed Governor Lisa Cook, ruling she can remain in office and vote at next week’s FOMC meeting. The court found that the “for cause” removal standard under the Federal Reserve Act only applies to misconduct during a governor’s tenure, so the administration’s claims were not considered valid grounds for dismissal.

FXStreet