Yesterday, gold prices returned to a one-week low after traders reduced expectations for a Federal Reserve rate cut next month following an increase in inflation.

The strengthening of the U.S. dollar, driven by a reassessment of monetary policy prospects, added further pressure on the precious metal. Gold typically shows an inverse correlation with the dollar, so a stronger U.S. currency reduces its appeal for investors holding other currencies. Expectations that interest rates will remain elevated for longer also weigh on gold, as the asset does not generate interest income, making it less attractive compared to bonds and other fixed-income instruments in a high-rate environment.

However, despite short-term pressure, the fundamental factors supporting long-term demand for gold remain intact. Geopolitical instability, concerns about slowing economic growth, and inflationary risks continue to drive investor interest in gold as a safe-haven asset.

By the end of yesterday's session, gold prices had fallen to 3,330 dollars per ounce after the previous session closed with a 0.6% drop. The Producer Price Index report showed that U.S. inflation in July rose at the fastest pace in the past three years. Bond yields and the dollar strengthened after the release, putting pressure on non-yielding gold, which is priced in the national currency.

Traders now estimate the probability of a U.S. central bank rate cut in September at around 90%, after having fully priced it earlier this week.

Since the beginning of the year, the value of the precious metal has risen by more than a quarter, with most of that growth occurring in the first four months. The increase was driven by heightened geopolitical and trade tensions, which boosted demand for safe-haven assets, while central bank purchases also contributed to strengthening its price.

Going forward, gold price dynamics will depend on macroeconomic data, statements from Federal Reserve officials, and the overall situation in financial markets. The meeting between the U.S. and Russian presidents in Alaska, scheduled for today, is also in focus. The outcome of the talks could affect demand for offshore assets. Donald Trump has warned he will take very serious measures if Vladimir Putin does not agree to a ceasefire in Ukraine.

Last week, uncertainty over whether U.S. tariffs would be applied to gold bars led to a sharp increase in the premium for New York futures compared to the London spot price. However, President Donald Trump stated this Monday that the tariff would not be imposed, narrowing the gap between the two markets.

As for the current technical picture for gold, buyers need to break the nearest resistance at 3,370. This would allow them to target 3,400, above which a breakout will be difficult. The most distant target is the 3,440 level. If gold declines, bears will try to take control of the 3,335 level. If successful, breaking this range would deal a serious blow to the bulls' positions and push gold down to the 3,313 low, with the prospect of moving toward 3,291.