Gold's (XAU/USD) Recovers to $3350/oz After Mixed CPI Reaction. What Next?

[Ben Graham]

Gold prices have seen whipsaw price action today in light of US inflation data and ongoing tariff developments. The precious metal did take out yesterday's low and continues to edge lower, but whipsaw price action as short while ago saw Gold return to the $3350/oz handle.

Most Read: Dow Jones finds the most relief after in-line US CPI

US CPI Inflation Data

The US Consumer Price Inflation (CPI) for July came in mostly as expected. Headline inflation increased by 0.2% compared to last month and 2.7% compared to last year. Core inflation (which excludes food and energy) rose by 0.3% month-on-month and 3.1% year-on-year.

Looking at the details, energy prices dropped by 1.1% from the previous month, while food prices stayed the same. For products most affected by tariffs, the impact seems mild for now. Core goods (excluding cars) increased by 0.2% in July, which is a slower rise compared to the 0.55% jump in June. This suggests that companies are currently absorbing most of the extra costs from tariffs.

Some specific changes: appliance prices surprisingly fell by 0.9%, clothing prices went up slightly by 0.1%, sporting goods increased by 0.4%, and furniture prices rose by 0.9%.

It would appear that any inflationary impact expected from tariffs thus far are largely absorbed within US corporate profit margins.Also frontloading ahead of tariff deadlines may be keeping prices in check.

The question going forward is now whether companies will continue to absorb increasing costs or will it be passed to consumers.

The impact on gold was interesting with an initial move higher followed by fresh daily lows and a test of key support at 3334. Gold should in theory rise, given that the inflation print only helps a Fed rate cut in September.

President Trump Rules Out Tariffs on Gold Bars

Tariffs will not be placed on gold bars, according to a statement by Trump on Monday, ending uncertainty that had caused panic in the gold markets last week.

Last Friday, gold futures prices hit a record high on reports of potential US tariffs on 1kg gold bars, which would have impacted Switzerland, a major gold exporter.

Following Trump’s statement, US gold futures fell 2.4% to $3,407 per ounce, while spot gold dropped 1.2% to $3,357. The Swiss Association of Precious Metals Producers welcomed the news but called for a formal decision to ensure stability.

A White House official said an executive order is being prepared to address misinformation about gold tariffs

Gold Prices Moving Forward

Looking at Gold over the medium-term and none of these events served as a catalyst for the precious metal. For now that 3500 handle seems to be unattainable as every bullish rally seems to be making a lower high the most recent of which occurred around 3407.

The failure to gain acceptance above the 3400 handle does leave the precious vulnerable to further downside.

Technical Analysis - Gold (XAU/USD)

From a technical standpoint, Gold on a two-hour timeframe is also flashing bearish signs.

There was a short-term ascending trendline which has been broken, with resistance being provided by the 100-day MA.

If the 100-day MA holds firm further downside could materialize. Immediate support rests around the 3330 handle with a break below opening up a retest of the swing high at 3314 and then of course the 3300.

A move higher has significant hurdles to clear in the short-term. First we have the 100-day MA at 3361 before the 50-day MA at 3373 and then of course the psychological 3400 handle.

Gold (XAU/USD) Daily Chart, August 12, 2025

Source: TradingView (click to enlarge)

Client Sentiment Data - XAU/USD

Looking at OANDA client sentiment data and market participants are Long on Gold with 67% of traders net-long. I prefer to take a contrarian view toward crowd sentiment and thus the fact that the majority of traders are net-long suggests that Gold prices could continue to slide in the near-term.

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