There was some confusion on Friday about gold tariffs, which saw gold futures rally to new all-time highs, while spot gold didn’t move much, ending the day just shy of the key $3,400 level. The precious metal nevertheless enjoyed another decent week during which it climbed 1%, adding to its gains from the week before. Boosted by weakness in US dollar and data, gold held up well despite a sharp increase in risk appetite, which saw global indices rally sharply. In the coming week, US CPI could set the tone for the dollar and bond yields, and by extension the gold outlook.  

👉  Read our longer term gold forecast here.

Confusion about gold tariffs

The Trump administration on Friday said it would issue a new policy, clarifying that imports of gold bars will not face tariffs. Earlier, reports that one-kilogram and 100-ounce gold bars would incur reciprocal tariffs caused gold futures to break to a new record high. But later, both the spot and futures prices of the metal eased off earlier highs. Haven demand reduced as equities soared after Donald Trump said that he plans to meet with Russian President Vladimir Putin “very shortly.” Trump wants to broker a ceasefire agreement in the Russia-Ukraine conflict. The optimism weighed on oil prices, which fell for the 7th consecutive session, while remarkably, gold ended another week higher.

US inflation in focus next week: CPI and PPI and UoM Inflation Expectations

In the week ahead, the gold outlook will be put to the test again, with the release of US inflation and retail sales data.

The Consumer Price Index (CPI) data is due on Tuesday, followed by the Producer Price Index (PPI) on Thursday. On Friday, focus will turn to the release of the University of Michigan’s Inflation Expectations survey, alongside UoM consumer sentiment, retail sales, the Empire State Manufacturing Index, and industrial production figures.

While the Fed’s dual mandate includes promoting maximum employment, its other primary objective is price stability—specifically keeping inflation around the 2% long-term target. With market concerns about future inflation increasing—partly due to the potential inflationary impact of Trump’s tariffs—investors are keen to see whether companies are starting to pass higher input costs onto consumers. Thus far, that hasn’t been the case, as CPI has undershot forecasts for the past five months. But could that trend now be reversing?

The upcoming PPI report also warrants close attention, as it feeds into the Fed’s preferred inflation measure—the core Personal Consumption Expenditures (PCE) index—due out later this month. Meanwhile, while Friday’s UoM inflation expectations could attract interest, the spotlight is likely to `fall more heavily on retail sales. Any combination of soft consumer spending data and stronger inflation could stoke fears of stagflation.

Fed seen cutting in September

Recently, a string of weaker-than-expected employment figures reignited expectations that the Federal Reserve may be forced to begin cutting interest rates as early as September, potentially followed by another cut in October. The December meeting is currently seen as a toss-up. Additional downward pressure on the dollar has come from softer ISM services and manufacturing PMI readings, as well as rising jobless claims. Reflecting this shift, several Fed officials have recently acknowledged the possibility of multiple rate cuts this year, even as inflation risks persist. This has kept gold prices supported, despite a sharp rally in the equity markets.

Gold outlook: Key levels to watch

The price of gold ended Friday around its bearish trend line that has been in place since the metal topped out in April. Should the trend line break and we move north of $3400 resistance, then this could potentially pave the way for new all-time highs in spot gold prices.

Support is now seen around 3385 initially, ahead of $3,360 and $3,335 next, with $3,300 being the most important short-term level to watch. A potential close below $3,300 in the coming days could tip the balance in the gold outlook towards the bearish side of things. But for now, the path of least resistance remains to the upside.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R