Gold (XAU/USD) is showing a moderate intraday recovery after falling to $4,300, its lowest level in the past week and a half, earlier in the session. At present, prices have risen to $4,360. Nevertheless, upside potential remains limited, as traders will likely prefer to wait for the release of US consumer inflation data before opening directional positions.

At the same time, data on the US Producer Price Index (PPI) released on Thursday strengthened expectations of higher interest rates from the Federal Reserve (Fed), which could extend support for the US dollar and limit the upside in gold prices.

Inflation data will be important not only for the upcoming monetary policy decision but also for the US dollar. Investors are already pricing in further monetary policy tightening by the Fed, by approximately 80 basis points by mid-2027, despite core inflation remaining more moderate and uncertainty surrounding the response of the new Fed Chair.

On Thursday, the US Bureau of Labor Statistics (BLS) reported that the headline Producer Price Index (PPI) rose 5.4% year-on-year in August, compared with 4.8% in the previous month, as revised, and above the forecast of 5.3%. The core inflation measure, excluding food and energy, matched forecasts and increased to 4.6% from 4.3% in July. These data add to the risks associated with high energy prices and reinforce expectations that the US central bank will raise interest rates again next week.

Crude oil prices jumped to their highest level since May 21 amid further escalation of tensions between the United States and Iran. On Monday, the US Treasury Department plans to impose sanctions on a major bank that has not yet been named as part of a campaign to exert economic pressure on Iran. Iran-backed Houthi forces in Yemen also captured the key city of Mocha on the Red Sea coast, strengthening their position near the strategically important Bab el-Mandeb Strait and increasing concerns about disruptions to oil supplies.

Against this backdrop, strong US Consumer Price Index (CPI) data could lead to a stronger dollar, warranting caution when opening long positions in gold. Nevertheless, the precious metal remains on track for a weekly decline and further losses.

From a technical perspective, gold is trading slightly above the 200-day exponential moving average (EMA) at $4,317; therefore, the price continues to receive support from key medium-term trend indicators. However, momentum is weakening: the MACD is moving toward zero, indicating fading momentum, while the Relative Strength Index (RSI) is in negative territory, indicating a loss of bullish strength. The nearest resistance levels are $4,360 and $4,400. On the other hand, the nearest support is at $4,317, reinforced by the 200-day EMA, followed by $4,300. A break below this zone would open the way toward the 50-day SMA and potentially deeper losses.