Gold extended its rally to new highs after the latest US Producer Price Index (PPI) report came in much higher than expected. The PPI tracks the prices received by producers, making it a key gauge of inflation pressures building upstream of the consumer. The reaction mirrored the one that followed the US CPI release: an initial spike lower, followed by a recovery and a push back to new highs.

Treasury yields also fell following the data, pointing either to overst positioning or to growing concerns about the economic outlook. Notably, while Core PCE estimates — the Federal Reserve's preferred inflation measure — now point to a monthly increase of 0.34% in October, rate hike expectations for October actually fell after the PPI release, leaving market pricing at odds with the hotter inflation print. Further out the curve, markets have seen a dovish repricing.

On the geopolitical front, there has been no change. The Saudi Arabia–Houthi conflict continues, while US–Iran negotiations remain at a stalemate. Oil prices, meanwhile, continue to rise amid the ongoing Middle East crisis. Gold has traditionally served as a hedge during periods of geopolitical uncertainty, which keeps these stalemates on the radar for traders even in the absence of fresh escalation.

Looking ahead, the key catalysts are the Flash PMIs, the FOMC meeting, the US–Iran negotiations and the US midterm elections. The Flash PMIs will provide an early read on the month's business activity, while the FOMC meeting will shape the near-term path of monetary policy expectations. If economic data begins to point to deteriorating conditions, markets could start pricing in an economic slowdown, a scenario that could initially support gold. If the data instead continues to support strong economic momentum, the precious metal could come back under pressure, unless the Fed stays more dovish than market expectations, as that would lower real yields and support gold.

Gold Technical Analysis – Daily Timeframe

On the daily chart, gold (XAUUSD, CFD contract) is finally approaching the downward trendline. Sellers will likely lean on the trendline, with a defined risk above it, to position for a drop into the 3,885 level. Buyers, on the other hand, will want to see the price break higher to pile in for a rally into the 4,700 level next, with the 4,500 level as the first target.

Gold Technical Analysis – 4-Hour Timeframe

On the 4-hour chart, a strong resistance zone sits around the 4,228 level. If the price probes above the trendline, that resistance will likely be the sellers' last line of defence. From a risk management perspective, sellers will likely step in around the trendline and the resistance, with a defined risk above the resistance, to position for new lows. Buyers, meanwhile, will want to see the price break above the resistance to open the door for new highs, targeting the 4,400 level next.

Gold Technical Analysis – 1-Hour Timeframe

On the 1-hour chart, a minor upward trendline defines the bullish momentum. Buyers will likely continue to lean on the trendline, with a defined risk below it, to keep pushing into new highs and target a break above the resistance. Sellers, in contrast, will look for a break lower to increase bearish bets into new lows, targeting the 3,885 level next. The red lines on the chart define the average daily range for today (ADR), a gauge of the typical distance price covers in a session that traders use to frame intraday expectations.