XAU/USD sellers continue to lurk at $2,530, is the range likely to break?

• Gold price turns positive as it crosses $2,500 as US PPI data and claims loom.
• The US dollar is holding the rebound alongside Treasury yields if Fed rate cut bets are weakened.
• The price of gold looks set for a range break, with buyers still hopeful on the back of an upbeat RSI.

The price of gold is making a minor attempt at recovery early Thursday as buyers remain bullish above $2,500. With the US Consumer Price Index (CPI) data, the focus now turns to the US Producer Price Index (PPI) and jobless claims data for further trade stimulus.

Gold price looks to US PPI data for fresh boost

Gold traders are biding their time and assessing critical US CPI inflation data out on Wednesday, which put a chill on increased bets for a huge interest rate cut by the US Federal Reserve (Fed) next week.

Data released by the US Bureau of Labor Statistics (BLS) showed on Wednesday that the CPI rose 0.2% on a monthly basis in August, in line with the expected print of 0.2%. Core CPI for August in the US rose 0.3% on the month compared to estimates of 0.2%. Annual CPI inflation eased slightly to 2.5% in August, while core CPI rose 3.2% versus forecasts of 3.2%.

Despite the softening of the annual CPI figure, shaky monthly and annual core figures have led markets to rule out an excessive Fed rate cut this month. Markets are currently pricing in an 85% chance of a 25 basis point (bps) cut, compared with 71% ahead of the data, CME Group’s FedWatch tool shows.

The price of gold tested the top barrier of $2,530 before witnessing a sharp decline in sticky US inflation data that triggered a further rally in the US dollar (USD) and US Treasury yields.

Despite the pullback, the gold price managed to defend its critical near-term support level near $2,505, keeping it within its three-week consolidation range.

In Thursday’s trade so far, gold buyers appear to have fought back, but lack bullish convictions amid persistent US dollar strength and an upbeat market mood. However, gold prices could find support from gains in other precious metals and industrial metals including palladium, nickel, etc., ahead of potential export restrictions being considered from Russia.

Traders are also looking to a new batch of top US economic data due on Thursday for further clues on Fed policy, which will ultimately affect the value of the US dollar and the price of gold.

Gold Price Technical Analysis: Daily Chart

Nothing seems to have changed for the price of gold from a short-term technical perspective. Buyers continue to remain bullish as the price of gold manages to produce daily closes above the 21-day simple moving average (SMA), now at $2,505.

The 14-day Relative Strength Index (RSI) has turned flat, but is still firmly above the 50 level, supporting the case for bullish potential.

Gold buyers are longing for a sustained breakout, the record high of $2,532, above which the psychological level of $2,550 will come into play.

If gold price again faces rejection near the $2,530 supply area, a correction would follow, with a daily close below the 21-day SMA at $2,503 needed to cancel the near-term bullish outlook.

A breach of the latter will trigger the previous week’s low of $2,472, followed by symmetrical triangle resistance, turned into support at $2,462.