Gold holds firm ahead of PPI as Fed cut bets rise and geopolitical tensions escalate

Gold (XAU/USD) is rising again as geopolitical risks and economic uncertainty drive renewed safe-haven demand. Rising geopolitical risks across Europe and the Middle East are keeping investors on edge. At the same time, markets await the U.S. Producer Price Index (PPI), which could influence upcoming Fed decisions. In addition, weaker labor data and growing anticipation of rate cuts have reinforced interest in gold. Ongoing political instability and a softening policy stance are fueling further gains in gold.

Gold edges higher on dovish Fed signals and escalating global risks

Gold rises after a brief pullback, driven by tensions over a suspected Russian drone entering Poland. In particular, the incident has heightened concerns of wider NATO involvement, prompting strong reactions from U.S. officials. In fact, several officials have termed it an “act of war,” intensifying concerns over global stability. Meanwhile, Middle East tensions also escalated as Israeli forces launched airstrikes on Hamas leaders in Doha. The strikes have heightened fears of regional instability, pushing investors back toward gold as a safe-haven asset.

Markets remain cautious ahead of today’s U.S. PPI release, reflecting a broadly defensive tone. A softer-than-expected print would strengthen the case for aggressive Federal Reserve rate cuts, boosting gold. Conversely, a stronger inflation print could briefly pressure gold, though the broader outlook still supports policy easing.

Moreover, recent downward revisions in U.S. job data strengthened those expectations. Nearly one million fewer jobs were recorded between April 2024 and March 2025. The unexpected revision has fueled speculation of near-term rate cuts. CME FedWatch data shows markets assigning an 84% probability to a 25-basis-point rate cut in September. There is also a 6% probability of a larger 50-basis-point move. Meanwhile, a court ruling prevented Donald Trump from removing Federal Reserve Governor Lisa Cook. The decision introduced fresh uncertainty around the Fed’s political stability, further adding to gold’s safe-haven demand.

Gold clears key $3,350 level, confirming strong breakout

The gold chart below shows a breakout above a key descending trendline that had capped price action since mid-July. Before this breakout, a large cup-and-handle formation developed. The chart reveals two distinct rounded bottoms, indicating mounting bullish momentum. After several failed attempts, gold finally cleared the neckline near the $3,350 level, confirming the breakout.

Following the breakout, momentum accelerated sharply. As a result, a well-formed bullish channel developed, with price consistently holding within its upper and lower boundaries. Since then, gold has gained nearly $300, reaching a new record high at $3,675. However, a slight rejection at the top of the channel led to a brief pullback, though the overall trend remains intact.

Currently, the uptrend holds steady as long as the price stays within the ascending channel. However, a move below it would raise concerns of short-term weakness. The overall trend remains constructive, with no clear signs of reversal yet. Meanwhile, market participants are closely watching today’s U.S. PPI data. A softer inflation reading could reignite buying pressure and drive gold to fresh all-time highs.

Gold outlook: Strong uptrend fueled by policy shift and global instability

Gold stays resilient as global tensions intensify and market uncertainty persists. The technical setup reinforces the bullish outlook, with price holding within a strong ascending channel. While short-term pullbacks may occur, the broader trend remains upward. As markets brace for key inflation data and monitor Fed signals, gold continues to attract safe-haven demand and holds near record highs.

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