The gold price (XAU/USD) is trading slightly lower near $3,330 in early Asian trading on Monday, pressured by stronger-than-expected US Producer Price Index (PPI) data and cautious market sentiment. Investors are now turning their attention to a high-stakes meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy, which could influence safe-haven demand for the precious metal.
Key Factors Weighing on Gold Prices
1. Strong US Inflation Data Reduces Fed Rate Cut Bets
Last week’s PPI report showed a 3.3% year-over-year increase in July, significantly higher than the expected 2.5% and the previous 2.4% reading. This hotter inflation print has led traders to scale back expectations for a September Fed rate cut, strengthening the US dollar and putting downward pressure on gold.
Current Fed Rate Cut Probability (September): ~45% (down from 65% last month) (Source: CME FedWatch Tool)
Impact on Gold: Higher interest rates typically reduce gold’s appeal since it doesn’t yield interest.
2. Mixed US Retail Sales Data
Friday’s retail sales report showed a 0.5% month-over-month increase in July, matching expectations but slowing from June’s revised 0.9% growth. While this suggests steady consumer spending, it hasn’t significantly shifted Fed policy expectations.
3. Geopolitical Uncertainty & Safe-Haven Demand
Despite gold’s recent dip, geopolitical tensions could provide support:
US-Russia Talks on Ukraine: Over the weekend, US envoy Steve Witkoff revealed that Trump and Putin reached a security agreement, but Ukraine’s NATO membership bid was blocked by Russia. (Source: Bloomberg)
Upcoming Trump-Zelenskiy Meeting: Traders await clarity on US-Ukraine relations, which could trigger volatility in gold prices.
Gold Price Forecast: What’s Next?
Short-Term Pressure: If Fed rate cut expectations continue fading, gold could test $3,300 support.
Upside Potential: Escalating US-Ukraine tensions or a weaker dollar could push gold back toward $3,400.
For deeper market insights, check Reuters’ latest gold analysis.
Key Levels to Watch
Resistance: $3,350, $3,400
Support: $3,300, $3,250
What Are Analysts Saying?
Goldman Sachs: “Gold remains a hedge against geopolitical risk, but Fed policy is the primary driver.” (Source: CNBC Markets)
UBS: “A September rate cut is still possible if inflation cools, which could boost gold.”
Final Thoughts
Gold’s near-term direction hinges on:
✅ Fed rate cut expectations
✅ US-Ukraine meeting outcomes
✅ Dollar strength & Treasury yields
For real-time gold price tracking, visit TradingView’s XAU/USD chart.
