Gold retreats from June 5 high as oil-driven Fed rate-hike bets underpin USD

Gold (XAU/USD) slipped from its June 5 high near $4,450 during the Asian session on Thursday, trading near the bottom of its daily range. The market reaction to easing US inflation signs subsided as investors anticipated potential energy price increases, prompting profit-taking and reducing interest in the non-yielding gold. On Wednesday, the US Bureau of Labor Statistics reported a slight decline in the headline Consumer Price Index (CPI) from 3.5% to 3.4% YoY in July, with the core index showing a modest rise of 2.5% and 0.2% month-over-month and year-over-year, respectively.

This development, coupled with a weak US Nonfarm Payrolls report and the Fed's potential to maintain interest rates in September, offered support to gold. However, concerns about inflation risks persist due to volatile oil prices stemming from the US-Iran standoff. The Houthi rebels in Yemen intensified attacks on vessels in the Red Sea and Bab el-Mandeb Strait, affecting oil prices and inflation expectations.

According to the CME Group's FedWatch Tool, there's an 80% likelihood the Fed will raise interest rates in 2026, supporting the US Dollar (USD) and putting downward pressure on gold. Markets await US economic data, including the Producer Price Index (PPI) and Weekly Initial Jobless Claims on Thursday, which could influence USD demand and gold prices.

Analytical indicators suggest potential resistance near the 200-day SMA at $4,502 and 61.8% retracement at $4,525.18, while support can be found at the 100-day SMA at $4,387 and lower levels at the 38.2% Fibonacci at $4,302 and the 23.6% level at $4,164.38.