Gold Price Outlook: XAU/USD Struggles Below $3,400 Ahead of US Inflation Report

Gold Price Outlook: XAU/USD Stays Capped Below $3,400

Gold Price Weakens Before US Inflation Data
Gold price slipped to around $3,390 in early Asian trading on Monday, easing from recent gains as the US Dollar strengthened slightly. The move comes as traders turn cautious ahead of Tuesday’s US inflation report, a key economic release that could influence the Federal Reserve’s interest rate outlook.

Fed Rate Cut Expectations Support Gold
Despite the pullback, rising expectations of a Fed rate cut in September provide some underlying support. According to Fed Governor Michelle Bowman, softer job market data strengthens the case for easing monetary policy, with her outlook signaling three potential rate cuts in 2025. Markets are now pricing an 89% probability of a September cut, and at least two cuts before year-end.

China Extends Gold Buying Streak
Adding to the bullish fundamentals, the People’s Bank of China extended its gold buying streak into July, marking nine consecutive months of accumulation. Central bank demand has been a key driver for gold’s resilience amid global economic uncertainty.

Key Resistance at $3,400
Technically, gold faces strong resistance at the psychological $3,400 level. A break above this threshold could open the door for further gains, while sustained weakness in the US Dollar and supportive central bank policies may help limit downside risk.

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