Gold Price Forecast: XAU/USD declines as bulls hesitate near $3,400, US inflation in focus

LONDON (August 11) Gold price (XAU/USD) trades 1.2% lower to near $3,350 during the European trading session on Monday. The yellow metal faces selling pressure as investors shift their focus to the United States (US) Consumer Price Index (CPI) data for July, which is scheduled to be released on Tuesday.

Investors will closely monitor the CPI data as it will indicate whether the impact of tariff-driven inflation is one-time or persistent. June’s CPI report showed an increase in prices of products, which are largely imported into the US.

Economists expect the headline and the core CPI – which excludes volatile food and energy prices – rose at a faster pace of 2.8% and 3.0% on year, respectively.

Escalating inflationary pressures might force traders to reassess bets supporting interest rate cuts by the Federal Reserve (Fed) in the September meeting.

According to the CME FedWatch tool, there is an 88% chance that the Fed will cut the Federal Funds Rate by 25 basis points (bps) to the range between 4.00% and 4.25%.

Gold price performs strongly in a high-inflation environment; however, the maintenance of a restrictive monetary policy stance by the Fed bodes poorly for non-yielding assets, such as Gold.

Meanwhile, investors also await a high-stakes meeting between US President Donald Trump and Russian leader Vladimir Putin, which is scheduled for next Friday, to discuss ending the war in Ukraine.

FXStreet