• Gold price attempts a tepid bounce early Wednesday as focus shifts to trade updates and US PPI data.
• The US Dollar retreats alongside Treasury bond yields even as risk-off flows persist.
• Gold price needs to crack the 50-day SMA support at $3,323; daily RSI reclaims midline.   

Gold price is replicating the tepid recovery moves seen in the first half of Tuesday’s trading as buyers try their luck the third time early Wednesday, heading into the US Producer Price Index (PPI) inflation test.

Gold price susceptible to potential US Dollar resurgence

Despite the latest uptick, Gold price appears to lack bullish conviction as the US Dollar (USD) remains in an upside consolidative mode against its major currency rivals, having risen for the seventh consecutive day on Tuesday.

The USD resumed its uptrend, capitalizing on the rally in the 10-year benchmark US Treasury bond yields after the US Consumer Price Index (CPI) accelerated in June, moving away from the Federal Reserve’s (Fed) 2% inflation target.

The June CPI increased 0.3% on the month, driving the 12-month inflation rate to 2.7%, in line with expectations. The core figures also rose 0.2% over the month and 2.9% annually, but undermined estimates.

The uptick in US inflation bolstered bets for an extended pause by the Fed for a longer period than initially expected, with the odds of a September Fed rate cut falling to about 52% from nearly 60% pre-data release, per the CME Group’s FedWatch Tool.

Hawkish Fed expectations combined with US President Donald Trump’s announcement of a trade deal with Indonesia helped the USD keep the upper hand, fuelling a fresh decline in the non-interest-bearing Gold price.

The US yields and the USD also tracked the advance in the Japanese government bond yields and the USD/JPY pair as the Asian nation’s bond market and the local currency suffered extensively on heightening fiscal and political concerns.

Citing a story from Asahi newspaper, Reuters reported that “Japan’s ruling coalition will likely lose its majority in the upper house election on July 20, heightening the risk of political instability at a time the country struggles to strike a trade deal with the US.”

However, America’s artificial intelligence (AI) pioneer’s, Nvidia, headlines-driven tech rally curbed the USD uptrend, offering some support to the bright metal.

In Wednesday’s trading so far, uncertainty over Trump’s trade policy and Jerome Powell’s tenure as a Fed Chairman act as headwind to the Greenback, allowing Gold price to come up for some air.

Looking ahead, it remains to be seen if Gold price can sustain the bounce as traders refrain from creating fresh positions ahead of the US PPI data.

If the June US PPI comes in hotter than the expected 2.5% print over the year, while the monthly PPI also above 0.2% forecast, a fresh leg higher in the USD cannot be ruled out at the expense of Gold price.

Meanwhile, developments on the trade front will continue to play a pivotal role in driving risk sentiment, especially after Trump announced late Tuesday that he will send letters notifying smaller countries of their US tariff rates, per Reuters.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price is stuck between two key barriers, with the 21-day Simple Moving Average (SMA) support-turned-resistance at $3,335 checking the upside.

On the other hand, the 50-day SMA at $3,323 cushions the downside.

The 14-day Relative Strength Index (RSI) is sitting just above the midline, currently near 50.50, suggesting that buyers could retain control.

Acceptance above the 21-day SMA is critical to sustaining the renewed upside, above which the 23.6% Fibonacci Retracement (Fibo) level of the April record rally at $3377 will be put to the test once again.

Further north, the $3,400 round level will challenge bearish commitments.

In contrast, rejection at the 21-day SMA could attack the 50-day SMA support.

Sellers must find a strong foothold below the 50-day SMA on daily closing basis.

The next healthy support levels are located at the 38.2% Fibo level of the same rally at $3,297 and the July low of $3,283.

Continues to Show Strength

Natural gas completed a 78.6% Fibonacci retracement last week, which was followed by a bullish reversal and rise into today’s high. Last week’s low at $3.15 certainly could be the end of the bearish correction. Although a lower trend support line was broken briefly, the line was quickly recovered and demand improved. Nonetheless, natural gas remains vulnerable to downward pressure until it sustained an advance above $3.57. That is the most recent lower swing high on the daily time frame, and a rise above will trigger a reversal of the very short-term downtrend structure beginning from the June 27 lower swing high at $3.75.

Weekly Bull Breakout

The bulls have the weekly pattern on their side as a one-week bullish reversal triggered yesterday. But it was not confirmed by a daily close above last week’s high of $3.47. However, that looks likely to happen today, and it will provide another piece of evidence supportive of an eventual continuation to the upside. A potentially solid resistance zone from $3.53 to $3.54 was approached today. It includes an AVWAP level from the April swing low and two moving averages, the 20-Day MA and 50-Day MA. They have converged to identify the same price level at $3.54.

Reached Key Decision Point

The behavior of natural gas around this potentially significant resistance zone should provide clues about supply and demand. For example, a daily close above the 20-Day MA shows buyers retaining control. That would increase the chance for a sustainable breakout above $3.57. A daily close above that level will then put the $3.75 lower swing high at risk of being busted, which would trigger a new bullish reversal. Either way, weakness will be watched by traders for a potential upside continuation.

For a look at all of today’s economic events, check out our economic calendar.