Gold: XAU/USD wobbles around 20-day EMA ahead of US PPI data

LONDON (July 15) Gold price (XAU/USD) trades in a tight range around $3,335 during European trading hours on Wednesday. The precious metal consolidates as investors await the United States (US) Producer Price Index (PPI) data for June, which will be published at 12:30 GMT.

Investors will closely monitor the US PPI data for June as it will indicate how much producers change prices of goods and services at factory gates to offset the impact of tariffs imposed by President Donald Trump on steel and aluminum, and automobiles and its components.

Economists expect inflation at the producer level grew moderately on year. However, month-on-month both headline and core PPI rose at a faster pace of 0.2%.

The US Consumer Price Index (CPI) report showed on Tuesday that prices of goods from import-heavy sectors rose sharply, which led traders to pare bets supporting interest rate cuts by the Federal Reserve (Fed) for the September policy meeting.

Analysts at Principal Asset Management said, “With increases in categories like household furnishings, recreation, and apparel, import levies are slowly filtering through, it would be wise for the Fed to remain on the sidelines for a few more months at least.”

Theoretically, Gold price outperforms in a high-inflation environment. However, the maintenance of interest rates at higher levels by the Fed bodes poorly for non-yielding assets, such as Gold.

Meanwhile, trade tensions between the European Union (EU) and the US continue to support the Gold price. A Bloomberg report showed on Tuesday that the trading bloc is prepared to announce proportionate countermeasures if trade talks with the US fails to materialize.

FXStreet