Gold trades range-bound as traders eye US PPI, Jobless Claims

LONDON (August 14) Gold (XAU/USD) remains caught in a tug-of-war between bulls and bears on Thursday, holding within the familiar range established earlier in the week as a modest uptick in the US Dollar (USD) tempers upside momentum.

At the time of writing, the precious metal is hovering near $3,355 during the European session, with market sentiment split between risk-on equity flows and underlying safe-haven demand.

Falling US Treasury yields are bolstering Gold’s appeal, with markets increasingly pricing in a potential Federal Reserve (Fed) interest rate cut at the September monetary policy meeting. Softer inflation readings and signs of a cooling labor market have strengthened these expectations, helping bullion stay supported despite the Greenback's modest recovery.

Market sentiment is shaky ahead of Friday’s US-Russia summit in Alaska, with investors on edge over a possible geopolitical fallout. US President Donald Trump warned Wednesday that Russia will face “very severe” consequences if it doesn’t end the war in Ukraine, telling reporters at the Kennedy Centre that action will follow if Moscow refuses to agree to a ceasefire after his meeting with President Vladimir Putin, as reported by CNN.

While some market participants see the talks as an opportunity to ease tensions, others fear that an escalation could reignite safe-haven flows into Gold. A breakdown in dialogue would likely fuel fears of deeper geopolitical instability, especially if the US follows through on threats of retaliatory action against Russia.

Looking at Thursday's economic calendar, traders will closely monitor Weekly Initial Jobless Claims and the Producer Price Index (PPI) for July. The data will offer fresh cues on labor market conditions and inflation trends, helping shape expectations for the Fed’s September monetary policy decision and guiding near-term direction for Gold prices.

Market movers: US Dollar stabilizes, yields drift lower with rate-cut bets building

• The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, stabilizes on Thursday after sliding to a more than two-week low on Wednesday. The index was last seen near 97.75, virtually unchanged on the day, as traders await the release of the PPI and Weekly Jobless Claims data for fresh policy cues.
• US Treasury yields drift lower for the second straight day, with the benchmark 10-year slipping about 2.5 basis points to 4.213% and the 30-year easing 2.6 basis points to 4.803%, pressured by mounting expectations of deeper Fed rate cuts before year-end.
• According to the CME FedWatch Tool, markets are now fully pricing in a 25 basis point rate cut at the Fed’s September meeting, up sharply from around 60% just a few weeks ago. Odds stand at roughly 66% for another cut in October and at 54.5% for a further reduction in December, underscoring the growing dovish tilt in market expectations.
• US Treasury Secretary Scott Bessent told Bloomberg TV on Wednesday that the Federal Reserve should be 150-175 basis points lower on rates. This followed his Fox Business interview late Tuesday, in which he urged a 50 bps cut in September, citing cooling inflation and revised weaker job data.
• Fed’s Austan Goolsbee said on Wednesday that upcoming Federal Reserve meetings will be “live” for policy decisions. He described tariffs as a “stagflationary shock” and expressed unease over the idea of a one-time price impact. Goolsbee noted that services inflation in the latest CPI report was “bad,” while describing the labor market as “pretty solid.” He added that slower job gains may reflect a drop in population growth rather than weakening demand and stressed that multiple months of favorable inflation readings are needed to gain the comfort required to cut rates.
• Fed’s Raphael Bostic said on Wednesday that the central bank has “the luxury” to wait before making a policy adjustment, given the strength of the labor market. He reiterated that he still sees one interest rate cut in 2025 as appropriate.
• US Initial Jobless Claims are expected at 228K, up from 226K previously, with Continuing Claims seen at 1.96 million, compared with 1.974 million earlier. July PPI is forecast to rise 0.2% MoM and 2.5% YoY, while core PPI is expected to rise 0.2% MoM and 2.9% YoY.

FXStreet