Gold prices rebound, but expectations of Fed rate hikes remain upward resistance

Huitong Network, September 11—— On Friday (September 11), spot gold rallied, recovering most of the previous day's losses. The retreat of the US dollar, synchronized declines in US Treasury yields and oil prices provided support for precious metals. However, the latest US Consumer Price Index (CPI) data reinforced market expectations that the Federal Reserve might raise interest rates next week, thus limiting the upside for gold prices. At the time of reporting, spot gold was trading near $4,370, up 1.20% intraday, and at one point tested the $4,400 level.

On Friday (September 11), spot gold rallied, recovering most of the previous day's losses. The retreat of the US dollar, synchronized declines in US Treasury yields and oil prices provided support for precious metals. However, the latest US Consumer Price Index (CPI) data reinforced market expectations that the Federal Reserve might raise interest rates next week, which has limited the upside for gold prices. At the time of reporting, spot gold was trading near $4,370, up 1.20% intraday, and at one point tested the $4,400 level.



Gold tumbled nearly 2% on Thursday. At that time, surging oil prices heightened inflation concerns, driving US Treasury yields to multi-year highs. The benchmark 10-year US Treasury yield hit 4.97% in early trading, a new high since October 2023, before retreating to near 4.91%. Meanwhile, West Texas Intermediate (WTI) crude oil once climbed above $100 but has since fallen back to around $96.50, down about 4% on the day. Despite the significant pullback, WTI crude remains on track for a second consecutive weekly gain.

This round of US CPI data overall met market expectations, resulting in a limited short-term response. The overall CPI in August rose 0.4% month-on-month, in line with expectations and higher than July’s 0.1% increase; the year-on-year gain remained at 3.4%, also matching market forecasts.

Excluding the more volatile food and energy prices, core CPI increased by 0.3% month-on-month, higher than the expected and previous value of 0.2%. Year-on-year, core CPI fell from 2.5% to 2.4%, in line with expectations. Gasoline prices rose 3.9% in August, contributing more than a third of the overall monthly CPI increase.

After the CPI data was released, the US dollar temporarily strengthened, but gains were short-lived. The US Dollar Index (DXY) spiked to 99.36 at the time the data was released, later retreating to around 99.

Prior to the CPI, Thursday's US Producer Price Index (PPI) showed August producer inflation rose year-on-year from 4.8% in July to 5.4%. According to the CME FedWatch tool, the market is currently pricing an 85% probability that the Federal Reserve will raise rates by 25 basis points at its September 15-16 meeting, a significant increase from 67% earlier in the day.

TD Securities said: “Even as the market faces rising energy prices and a greater probability of a short-term Fed rate hike, gold still holds firm at its high support range.” The firm believes, “Strong economic data and a more hawkish Fed may only trigger modest short-term selling in gold, delaying the next round of rally, but are unlikely to cause a deep drop.”

From a medium- to long-term perspective, TD Securities notes: “Expectations of a weaker US dollar, continued central bank gold buying, and renewed ETF inflows provide solid bottom support.” This supports the view that even if gold shows short-term weakness, downside risk is likely limited in an overall positive environment.

(Spot Gold Daily Chart Source: EasyHuitong)

Spot gold continues to maintain a mildly bullish pattern, with prices standing above the 50-day and 100-day moving averages, suggesting underlying buying after the latest retracement remains intact. However, upside is capped by resistance near the 200-day moving average at $4,537, limiting the overall upward momentum.

From the chart’s moving averages, the 50-day MA is near $4,430, the 100-day MA around $4,385, and the 200-day MA near $4,537. The current gold price trades near $4,374, slightly below the 100-day MA, reflecting a short-term consolidation near the top of the range.

The daily Relative Strength Index (RSI) is around 48, not yet entering overbought territory; the MACD histogram is near the zero axis, indicating weak short-term momentum. The Average Directional Index (ADX) is low, suggesting the market is likely in a consolidation phase rather than a clear trending environment.

Downside support: If gold breaks below the current range, the first support focuses on the $4,300-4,320 area; if it continues to weaken, the next target is the 50-day MA near $4,270, followed by the round numbers at $4,150 and $4,000.

Upside resistance: The 200-day MA near $4,537 remains the key resistance. If prices can consistently hold above this level, the bearish structure will be weakened and bulls could open up further upside potential.