Gold (XAU/USD) Coils Ahead of US CPI… Are Bulls Exhausted?

[Ben Graham]

Gold prices are holding in and around the $3650/oz handle. The precious metal is benefitting from the perfect combination of political uncertainty, geopolitical risk and of course Fed rate cut bets.

Russia Conflict Sees Nato Trigger Article 4... What Next?

On Wednesday, Poland, with help from its NATO allies, shot down what they believed to be Russian drones that had entered Polish airspace. This is the first time a NATO country has fired shots during the conflict between Russia and Ukraine.

Poland's Prime Minister, Donald Tusk, told parliament that this was "the closest we have been to open conflict since World War Two." However, he also added that he doesn't believe they are on the verge of war.

Tusk called the incident a "large-scale provocation" and said he had activated Article Four of NATO's treaty, under which alliance members can demand consultations with their allies.

Moscow has denied responsibility for the attack. The Russian Defence Ministry said its drones carried out strikes on military targets in Western Ukraine

So far nothing much has changed except an increase in haven demand and a rise in Oil prices. If NATO does decide to respond in some way that could be seen as aggression by Russia, Gold could be set for further gains.

This is definitely worth monitoring. For a full breakdown of events, read Chaos in Eastern Europe – Oil (WTI) prices lagging the move?

Other Factors Supporting Gold Prices

The Israel attack on Qatar yesterday has also added to the risk premium while political turmoil in France has done the same. Hence why I am saying we are currently seeing the perfect cocktail for Gold prices to remain elevated.

Add to that the expectations for Federal Reserve rate cuts which received a boost as US PPI data came in well below expectations.

For more on the PPI data today, read Breaking News: US core PPI rises by 2.8% Y/Y in August vs 3.5% expected

Markets will be focused on the US CPI inflation numbers out tomorrow while the discussions between NATO members may also factor into where gold prices head to next.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Technical Analysis - Gold (XAU/USD)

From a technical standpoint, Gold continues to hover near its all time highs.

Momentum indicators are all in sync with the current bullish narrative with a selloff proving elusive thus far.

The one positive for potential short sellers comes from the fact that the PPI data and downward revisions to the job numbers did not push Gold beyond the $3700/oz handle.

This suggests that we could get a pullback toward the $3600/oz before Gold is able to gain acceptance above the $3700/oz handle.

Downside support may be found at the recent swing low at the $3620 handle before $3600 comes into focus.

A move to fresh all time highs will have to gain acceptance beyond the $3700 handle if the bullish rally continues. This may require further geopolitical risk or a really big downside miss by the US CPI data.

Gold (XAU/USD) 30M Chart, September 10, 2025

Source: TradingView (click to enlarge)

Client Sentiment Data - XAU/USD

Looking at OANDA client sentiment data and market participants are Short on Gold with 59% of traders net-short. I prefer to take a contrarian view toward crowd sentiment and thus the fact that the majority of traders are net-short suggests that Gold prices could continue to rise in the near-term.

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