Gold Gains on US Inflation Data

Gold ( XAU/USD ) rose by over 0.45% on Tuesday, after data showed US consumer inflation picked up less than expected in April

Easing trade tensions between the US and China have reduced demand for safe-haven assets, resulting in a 0.4% decline in gold towards $3,234. However, ongoing concerns about global economic instability, currency devaluation, and geopolitical risks continue to support gold’s role as a protective asset. Central banks—especially those in emerging markets—have increased gold purchases to diversify their reserves and safeguard against potential sanctions, further strengthening underlying demand.

"The numbers were a little higher than I was looking for, but... year-to-year, 2.3%, that’s not bad", Peter Cardillo, chief market economist at Spartan Capital in New York, said about the US inflation data. "The report basically indicates that the Federal Reserve (Fed) needs to be very cautious and that the stand that they have taken is probably the right course, for now".

XAU/USD fell slightly during the Asian and early European trading sessions. Today, the calendar is relatively uneventful, but traders should continue to monitor developments around global trade tariffs. If the rhetoric continues to ease, XAU/USD will likely experience a sharp downward correction. Additionally, three Fed policymakers will give speeches later today, and their comments may spur volatility in XAU/USD. Key levels to watch are resistance at $3,262 and support at $3,192.

Euro Rebounds From 1.11000

The euro ( EUR/USD ) rose by 0.96% towards 1.11853 against the US dollar (USD) on Tuesday after the US dollar posted its strongest drop in three weeks. Weaker-than-expected US consumer inflation data reinforced the case for a move dovish Federal Reserve (Fed) policy amid easing global trade tensions.

"Despite the easing of the USD overnight, we consider there is more upside to the USD in the near term as market participants reassess the outlook for the US and global economies following the temporary US–China trade deal", Commonwealth Bank of Australia analysts wrote in a client note. They predicted a 2–3% rise in the US Dollar Index over the next few weeks. However, the analysts added that ’we do not expect a full recovery in the USD back to levels traded at the start of the year". ’Erratic policymaking in the US has probably caused some permanent damage to the USD’s status as a safe-haven currency."

EUR/USD rose slightly during the Asian and early European trading sessions. Today’s macroeconomic calendar is relatively uneventful, so the pair is unlikely to break its current trend. Key levels to watch today are support at 1.11000 and resistance at 1.12000.

The Japanese Yen Weakens

The Japanese yen ( USD/JPY ) lost 0.66% against the US dollar (USD) on Tuesday.

Fundamentally, Japan’s wholesale inflation remained elevated at 4% year-on-year in April, slightly easing from 4.3% in March. The decline signalled ongoing cost pressures from labour and raw materials. Persistent inflation keeps the Bank of Japan (BoJ) under pressure to tighten monetary policy further, which could support the yen. At the same time, the JPY’s appreciation has contributed to a 7.2% decline in the import price index, helping to alleviate some upward pressure on overall costs.

Analysts anticipate that the BoJ could implement another rate hike in September or October, building on its January move towards 0.5%, gradually shifting away from its ultra-loose stance. In the near term, the direction of the JPY will likely hinge on incoming economic data and the central bank’s assessment of inflation dynamics and global risks.

USD/JPY fell during the Asian and early European trading sessions. Macroeconomic data showed that Japan’s Producer Price Inflation ( PPI ) slowed towards 0.2% month-on-month in April from 0.4% in March. Data showed that Japan’s producer prices rose by 4% year-on-year in April, down from 4.2% in March, marking the slowest pace since December. USD/JPY traders should watch the critically important 148.640 level, as a break above it might trigger a major buyout. The support level for today is 147.000