Gold is set to end the week with markets almost entirely focused on two key events: the release of the US Consumer Price Index (CPI) for August today and the Federal Reserve’s interest rate decision on September 16.

The backdrop this time is unusual. Rather than speculating about the size of the next rate cut, markets are now pricing in the possibility of a rate hike. Fed funds futures indicate around a 60% probability of a 25-basis-point increase at the September meeting, compared with approximately 44% at the beginning of August. This repricing followed Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole, where he stressed that the more moderate inflation readings seen over the summer did not reflect a genuine improvement in the broader inflation trend. Expectations were then reinforced by a stronger-than-expected August jobs report.

Inflation is the key factor behind this hawkish shift in market expectations. The Consumer Price Index rose 0.1% in July and 3.4% year-on-year, while core CPI stood at 2.5% annually, still clearly above the Fed’s 2% target. Analysts expect the August reading to rise 0.4% month-on-month and 3.4% year-on-year. An early warning came just one day earlier, when August producer prices rose 0.4% month-on-month, pushing the annual PPI rate to 5.4%, driven largely by energy and diesel prices.

This leaves gold facing two potential scenarios:

  • A hotter-than-expected reading - above 3.4%, accompanied by an acceleration in core inflation, could strengthen the case for a rate hike, push real yields and the US dollar higher, and weigh on gold. As a non-yielding asset, gold tends to face significant headwinds when real yields rise.
  • A reading in line with expectations, or a weaker-than-expected core CPI print, could support the case for the Fed to keep rates unchanged for a sixth consecutive meeting and ease expectations for real yields, potentially removing a key source of pressure on gold ahead of the Federal Open Market Committee meeting.

From a broader perspective, gold’s structural support remains intact. The metal is still up more than 21% year-on-year, even after retreating from its record high of $5,589 reached in January 2026. The current price action can therefore be viewed as a correction within a long-term uptrend rather than a breakdown of that trend.

Technical Outlook

Figure: XAUUSD, H4, Trading View

As per analyst analysis gold’s latest bullish wave extended far enough to break above the previous lower high, shifting the market structure from bearish to bullish on the four-hour timeframe.

As shown on the chart, the corrective wave that followed this advance is developing within a descending channel, a corrective pattern that often precedes an extension move in the direction of the prevailing bullish structure.

Applying Fibonacci retracement levels to the latest bullish wave shows that price is currently reacting from a key demand zone defined by the 0.786 level at 4,331.347 and the 0.88 level at 4,309.904. A rebound from this area could mark the beginning of a new bullish wave, with an initial short-term target at 4,456 and a medium-term target at 4,589.

On the downside, 4,282.530 remains the critical level for the current scenario. The bullish outlook remains valid as long as price does not close below this level and establish a new low on the four-hour timeframe. A confirmed break below this level and the formation of a new low would invalidate the bullish scenario outlined above.