Cooling U.S. inflation reduces July Fed rate hike odds. Can gold price regain momentum?

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Gold slips 0.3% today to $4,040

Highlights

Gold attracted strong safe-haven demand after softer U.S. CPI data eased fears of an imminent Fed rate hike.
Lower inflation readings have reduced the opportunity cost of holding Gold, creating a more favorable macro backdrop for flows.
Technical signals show intraday buyer strength despite a bearish medium-term trend, with price likely to stay range-bound between $4,006 and $4,074 in the next few days.

Lower rate hike expectations boost safe-haven demand

Gold saw renewed buying interest as traders positioned ahead of the softer U.S. CPI data release, which increased the asset's appeal as a safe haven, according to Fxempire. The latest inflation reading points to cooling price pressures, reducing expectations for a July Federal Reserve rate hike and lowering the opportunity cost of holding Gold, as also noted by FXEmpire. This shift in rate expectations provided a supportive macro backdrop for the metal’s recent flows, while technical positioning continues to influence intraday sentiment.

Technical barriers persist as momentum signals remain neutral

On the H1 chart, XAU is trading below the MA-20 at $4,048 but remains above the MA-50 at $4,035. The price is clearly under the MA-200 at $4,077, with the Ichimoku Kijun on the daily timeframe marking resistance at $4,055. The Moving Average Convergence Divergence (MACD) shows a sell signal, while the Average Directional Index (ADX) is neutral, indicating weak trend momentum. The Relative Strength Index (RSI) is near 50 with a mild sell bias; meanwhile, the Stochastic RSI and Commodity Channel Index (CCI) both remain neutral. Bull/Bear Power classifies the intraday setup as overbought, highlighting ongoing buyer activity despite broader uncertainties.

Low reversal risk as gold seen consolidating near current range

Over the next two to three sessions, XAU is forecast to remain within a typical volatility band between $4,006 and $4,074. There is a 35% probability of an upward move and a 65% probability of downside, suggesting reversal risk is low. The baseline scenario calls for consolidation within the current zone. If price breaks above the $4,055 resistance level, further upward momentum may develop. Conversely, a move below $4,006 would likely renew the prevailing downtrend.

Viktoras Karapetjanc, analyst at Traders Union, believes Gold is benefiting from renewed investor demand as US inflation expectations cool. He sees macro drivers like reduced Fed rate hike odds supporting sentiment, even as technicals show weakening momentum. Consolidation within the current range is likely, but a break above $4,055 could trigger upside. Downside reversal risks remain but are limited for now. "Patience is warranted here as macro fundamentals provide a positive backdrop — a sustained move above $4,055 would confirm renewed bullish momentum for Gold."

Previously it was reported that U.S. authorities intensified enforcement against trade fraud in the gold sector, signaling a tougher regulatory stance on customs violations and supply-chain transparency. In the wake of ongoing macroeconomic shifts and evolving regulatory risk, traders should closely monitor the $4,055 resistance and $4,006 support levels, as a decisive move outside this band could set the tone for Gold’s next directional move.

Source of Data: XAU Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.