Gold holds steady above $4,400 as traders seem hesitant ahead of US inflation data

Gold prices remain stable around $4,400 as market participants appear hesitant ahead of upcoming US inflation data. The US Producer Price Index (PPI) will be released later on Thursday, while the Consumer Price Index (CPI) is due on Friday. These key data points could provide more insights into the Federal Reserve's (Fed) policy direction, which in turn could impact the US Dollar's (USD) price dynamics and bolster the non-yielding nature of gold.

At present, there is a 60% probability that the central bank will raise interest rates at its upcoming meeting on September 15-16, driven by better-than-expected Nonfarm Payrolls (NFP) report last Friday. Inflation concerns due to persistently high energy prices contribute to the expectation of immediate Fed tightening. Iran's recent attack on ships near the Strait of Hormuz, following the US' announcement of sinking five Iranian oil tankers, adds to oil supply disruption worries and supports the metal, further strengthening the case for a more hawkish stance from major central banks.

Traders have priced in rate hikes of 25 basis points (bps) by the European Central Bank (ECB) and the Bank of Japan (BoJ) in the latest developments. Australia's Reserve Bank (RBA) is also considering a potential rate increase later this month. Elevated US bond yields, despite the Treasury's announcement of buying back up to $6 billion in 10-year to 20-year maturities, have put pressure on US Dollar bulls, creating a tailwind for gold.

On the 4-hour chart, gold is trading above the 200-period Simple Moving Average (SMA) near $4,362 but below the 100-period SMA at about $4,491, indicating a neutral to slightly capped broader tone. The 38.2% Fibonacci retracement at roughly $4,427 acts as immediate resistance. Despite a modestly positive Moving Average Convergence Divergence (MACD) reading and a Relative Strength Index (RSI) around 51, sustained strength above this barrier could lead to further gains, targeting the 100-period SMA near $4,491, with the 23.6% retracement at $4,530 as a higher hurdle.

If selling pressure resumes, the $4,362 region, aligning with the 200-period SMA above the 50% retracement near $4,344, could offer initial support, with deeper cushions at the 61.8% level at $4,260 and the 78.6% retracement near $4,141.