Gold recently saw a strong rise but has now leveled off as traders await fresh US inflation data. Today, the Producer Price Index (PPI) will be released, followed by the Consumer Price Index (CPI) tomorrow. These reports are important ahead of next week’s Federal Open Market Committee (FOMC) meeting. A rate cut of 25 basis points is likely, but if inflation shows signs of slowing down, the chance of a 50 basis point cut might increase, which could raise gold prices even more.

Technical Analysis of Gold

Analyzing gold technically reveals trends over different timeframes. On the daily chart, the momentum has slowed. Buyers might look for chances around the 3,400 level, while sellers may target a drop to the 3,120 level. This same trend is visible on the 4-hour and 1-hour charts, where slight upward trends indicate bullish energy. Buyers are expected to support these trends to drive prices higher, while sellers will aim for lower targets. Key upcoming financial reports include today’s US PPI, tomorrow’s US CPI, and Jobless Claims figures, along with Friday’s University of Michigan Consumer Sentiment report. Gold’s strong rally has paused just above the $3,450 level as we await crucial economic data. The upcoming US inflation reports will significantly influence the Federal Reserve’s decisions next week. A lower inflation rate would strengthen the market’s expectation for a more relaxed monetary policy, especially after last week’s disappointing Non-Farm Payrolls report, which indicated only 150,000 jobs were added in August 2025. This sets up a clear situation for options traders in the days ahead. If tomorrow’s CPI is lower than expected, it could increase the likelihood of a 50 basis point cut, making call options on gold futures an appealing choice for a short-term profit. On the other hand, a surprisingly high inflation figure would lessen the chances for big cuts, likely leading to a stronger dollar and making put options a good strategy to predict a market correction.

Probability of Rate Cuts

At this moment, futures contracts are indicating a 100% probability of a 25 basis point cut in next week’s FOMC meeting, with a 35% chance of a larger 50 basis point cut. This marks a significant shift from the aggressive rate hikes seen in 2023 and early 2024, which pushed the federal funds rate above 5%. We believe the shift toward a more dovish stance is now firmly established, which supports gold fundamentally. For traders using these strategies, the technical levels suggest clear points for risk management. A bullish call option strategy finds support near the main trendline at the $3,400 level, which could serve as a good entry point if the market dips due to initial reactions. A clear break below $3,400 would be a signal for bears, likely leading to a deeper correction toward the $3,120 support area. Even amid short-term uncertainties, gold’s broader trend appears upward as long as the Fed keeps easing. We expect real yields to continue to fall, which has historically supported gold prices since the post-pandemic inflation shock of the early 2020s. Thus, using any dips driven by hawkish news to buy longer-term call options may be a smart approach to benefit from the anticipated upward trend. Create your live VT Markets account and start trading now.

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