Gold Stuck Near One-Week Low as Strong Dollar and Oil Prices Weigh
Gold prices are struggling to recover from their recent decline, hovering near a one-and-a-half-week low touched during the Asian session on Friday. The US Producer Price Index (PPI) report released on Thursday showed a 5.4% YoY increase in August, exceeding expectations and reinforcing bets that the Federal Reserve will raise interest rates next week. This has kept the US Dollar strong, capping gold's upside.
The PPI data comes as tensions between the US and Iran escalate, with the US Treasury planning to sanction a large bank on Monday as part of its economic pressure campaign against Iran. This is adding to concerns about oil supplies and keeping the geopolitical risk premium in play.
As a result, gold remains under pressure, with traders waiting for the release of the latest US consumer inflation figures before making fresh directional bets. The metal trades marginally above the 50% retracement at $4,320 and the 200-day Exponential Moving Average (EMA) at $4,313.
Technical analysis suggests that gold faces resistance at the 38.2% Fibonacci retracement at $4,409, followed by a stronger barrier at the 23.6% retracement of $4,519. On the downside, immediate support is seen at the 50% retracement at $4,320, reinforced by the 200-day EMA at $4,313.