Gold Prices Brace for U.S. Inflation Report

Markets await and Trump Threatens

Markets are closely watching the release of the U.S. Consumer Price Index report for June. Expectations suggest that inflation may rise following the Trump administration’s recent tariff measures.

It’s important to note that inflation may continue to rise in the coming months. Previously, companies sought to mitigate the impact of tariffs by importing large volumes of goods before the new tariffs took effect and by stockpiling inventory, as well as by reducing profit margins. However, these measures provide only temporary relief. As these buffers are exhausted, prices are likely to increase again, potentially dampening consumer demand and spending. This would weigh on corporate profits while simultaneously driving inflation higher due to rising commodity costs.

President Trump has also issued a warning to Russia, threatening economic sanctions that could include tariffs of up to 100% on Russian imports if it does not halt military operations and agree to a ceasefire with Ukraine within 50 days. This stance is backed by both Democratic and Republican lawmakers, who are preparing a congressional bill proposing 500% tariffs on countries that continue purchasing Russian oil and gas.

When Could the Federal Reserve Cut U.S. Interest Rates?

Following a significant decline in the U.S. dollar during the first half of the year, the greenback has stabilized, particularly after recent employment data showed the continued resilience of the labor market. This data has reinforced the Federal Reserve’s cautious stance, with most members opting to delay rate cuts to better assess the inflationary impact of new tariffs, despite mounting pressure from President Trump, who has even called for Fed Chair Jerome Powell’s resignation over the rate cut’s delay.

If today’s inflation report exceeds expectations, it would further support the Fed’s plan to delay a rate cut until September, followed by another 25-basis-point cut in December, a scenario already being priced in by the markets. Conversely, lower-than-expected inflation could increase the chances of a rate cut as early as July, particularly since some Fed members have expressed openness to that option if inflation remains contained. However, this scenario remains unlikely given the renewed escalation in the trade war, with President Trump imposing tariffs on several U.S. trading partners ranging from 20% to 50%.

Gold Prices Lack Clear Direction

Since June 23, gold has been moving sideways, correcting its earlier uptrend and forming lower highs and higher lows. The metal is currently trading within a zone between $3,357 and $3,127. After multiple failed attempts to close above the high end of this zone, a daily close above $3,357 could embolden bulls to join the market, potentially driving the price toward $3,500/oz. In that case, the resistance level at the June 16 high of $3,452 should be closely monitored.

Key levels to watch in a bearish scenario

Continued failure to close above $3,357 may indicate insufficient momentum to resume the uptrend, possibly inviting increased selling pressure and pushing prices back toward the low end of the above-mentioned trading zone located at $3,127. In this scenario, the support level at the June 30 low of $3,246should be kept in focus.

Gold Daily Price Chart

Chart Source: ADSS Platform