On Thursday, gold was trying to maintain its optimism. On Wednesday, the US Bureau of Labor Statistics (BLS) announced that the Producer Price Index (PPI) in the US annually fell to 2.6% in August compared to 3.3% a month earlier. Other indicators showed that the core PPI—excluding food and energy—rose 2.8% year-on-year, down from 3.7% in July.
The absence of inflationary pressure from producers, despite the imposed import tariffs, signals weakening domestic demand amid instability in the labor market. Even though the released Consumer Price Index exceeded forecasts, this dynamic supports market expectations of an upcoming interest rate cut by the Federal Reserve at next week's policy meeting.
Moreover, market participants are pricing in a relatively low probability of a significant rate cut at the upcoming September 17 meeting, but expect three consecutive 25-basis-point Fed cuts by the end of the current year. This has halted the dollar's strengthening—which tried to rebound from its July 28 lows—and is supporting gold.
In trade, US President Donald Trump called on the European Union to introduce 100% tariffs on imports from China and India as part of pressure on Russia to end the conflict in Ukraine. Last month, Trump raised tariffs on Indian goods to 50%, citing continued purchases of Russian oil.
Meanwhile, on Wednesday, Polish troops shot down Russian drones that crossed the country's airspace after carrying out missions in western Ukraine. This is the first time that a NATO country opened fire during the Russia-Ukraine conflict, raising the risk of further geopolitical escalation.
Trump also threatened to tighten sanctions against Russia following a major aerial bombardment in Ukraine. This further supports gold, limiting any significant downward corrections, as the metal serves as a safe haven for capital.
From a technical standpoint, the daily RSI (Relative Strength Index) continues to remain in overbought territory, confirming the likelihood of consolidation or a minor pullback. However, further declines below Thursday's low around $3612 will meet support near the key $3600 round level, ahead of the weekly low around $3578. A convincing break of this area would clear the way for deeper losses, pushing gold toward intermediate support at $3565–3560, which could bring prices down to last Thursday's low in the $3510 area.
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