gold under pressure with the rise of the dollar and the inflation outlook

The course ofor remained higher for the second straight day, encouraged by expectations of further rate cuts by the Federal Reserve. Demand for this precious metal is intensifying due to a more cautious market tone, providing a positive boost to the value of theXAU/USD. However, more limited prospects for aggressive monetary easing by the Fed continue to support the American dollarwhich could limit the potential for gold to rise.

Also read: Gold very close to a new price record!

Technical rebound and stabilization of the gold market

On Friday, gold benefited from continued buying momentum, recovering some of the losses recorded at the start of the week. After falling towards $2,602, gold prices rebounded, boosted by an unexpected rise in weekly unemployment claims in the United States. This signal of weakness in the labor market could encourage Fed to further reduce interest rates, leading to a moderate decline in US bond yields and a calmer risk environment, which favors demand for gold.

American inflation and its impact on the dollar

Inflation data for UNITED STATESreleased Thursday, were higher than expected, calling into question the expectation of a more pronounced rate cut by the Fed in November. These statistics also allowed the dollar to slow its recent decline, after reaching a peak since mid-August. This could discourage investors from taking aggressive bullish positions in gold, even though XAU/USD has already erased much of its weekly losses.

All eyes are now on the upcoming US Producer Price Index (PPI) report, which is expected to provide further momentum for the dollar and influence gold prices in the near term.

Economic context: a market awaiting clarification

According to the U.S. Department of Labor, the Consumer Price Index rose 2.4% year-over-year in September, while the core index (excluding food and energy) rose 3.3%. The data fueled speculation that the Fed would cut rates more slowly, strengthening the dollar. However, the rise in jobless claims — totaling 258,000 versus an expected 230,000 — highlights continued weakness in the jobs market, which could keep pressure on the Fed to lower rates, thereby benefiting the non-yielding gold.

10-year bond yields in the United States remain above 4%, favoring the dollar, and could slow further increases in the price of gold. Separately, upcoming announcements from China’s Ministry of Finance this weekend, which will detail its fiscal stimulus measures, could also support risk sentiment, limiting any potential for a significant increase in the value of gold.

Technical analysis: the threshold of $2,670 as a key objective for investors

On a technical level, the rebound above the $2,630 mark and the return to this support level shows some optimism for investors. Gold oscillators on the daily chart remain in positive territory, indicating that the trend could continue upward towards the $2,657 threshold and then into the $2,670-$2,672 supply zone. This movement could potentially push gold towards an all-time high at $2,686, followed by the psychological threshold of $2,700, marking a continuation of the upward trend observed for several months.

On the other hand, immediate support for gold lies around $2,628. A clear break below this level could signal further decline, taking gold back towards the key $2,600 support area, and potentially lower towards the $2,560, $2,530, and $2,500 levels if selling pressures persist.

PPI as a crucial indicator for market forecasting

The producer price index (PPI), published by the Bureau of Labor Statisticsis closely observed as a key indicator of commodity inflation. A high PPI reading is generally seen as a strengthening factor for the dollar, while a lower reading could reverse the trend, thereby increasing upward pressure on the XAU/USD.

Investors remain on alert ahead of upcoming economic reports that will have a direct impact on dollar demand and short-term gold movements, particularly as the weekend approaches.