On Tuesday (September 10th) during the US trading session, spot gold prices rose sharply, approaching $2520 per ounce at one point. On Wednesday, investors will receive US CPI data, which is expected to trigger a major rally in the gold market.

Analysts pointed out that the weakening of the US dollar and US Treasury yields drove gold prices to strengthen on Tuesday, and in addition, geopolitical tensions continue to favor the gold trend.

During Tuesday's New York trading session, spot gold surged from the $2500/ounce level, reaching as high as $2518.48/ounce.

As of Tuesday's close, spot gold rose $10.29, or 0.41%, to close up $2516.38 per ounce.

Analyst Christian Borjon Valencia pointed out that in the North American trading session on Tuesday, gold prices rose as the yield of US treasury bond bonds fell and the US dollar weakened. Traders focus on the key US August inflation report.

Focus on the US CPI

On Wednesday, market participants will closely monitor the US Consumer Price Index (CPI) data for August.

The year-on-year growth rate of US CPI in August is expected to decrease from 2.9% to 2.6%, while the year-on-year growth rate of core CPI (excluding volatile food and energy prices) is expected to remain at 3.2%.

Economists predict that both the August CPI and core CPI in the United States will rise by 0.2% month on month.

FXStreet analyst Eren Sengezer pointed out that the inflation data in the United States in August may drive the next trend of gold.

Sengezer pointed out that if the core CPI rose 0.4% or more month on month, the yield of US treasury bond bonds may rebound, causing gold to lose its foothold. On the other hand, if the data is equal to or lower than market expectations, it may make it difficult for the US dollar to attract investors, thereby helping gold rise.

Peter A. Grant, Vice President and Senior Metals Strategist at Zaner Metals, predicts that gold prices will reach a historic high. The price of gold reached a historic high of $2531.60 per ounce on August 20th.

Kinesis Money market analyst Carlo Alberto De Casa said, "If inflation data falls far below expectations and raises hopes of a 50 basis point rate cut, gold prices may hit a historic high. But even if the market unanimously agrees to a 25 basis point rate cut, gold prices will not fall significantly because the Federal Reserve will definitely cut rates again

According to CME's "Federal Reserve Watch" tool, the swap market shows that the probability of a 50 basis point rate cut has risen to 33%, while the probability of a 25 basis point rate cut is 67%.

Earlier, a Reuters survey showed that 92 out of 101 analysts expected the Federal Reserve to cut interest rates by 25 basis points at its meeting on September 17-18.

Due to the fact that gold does not yield interest, interest rate cuts can reduce the opportunity cost of holding gold, thereby increasing its investment attractiveness.

Ukraine launches largest drone attack on Moscow to date

According to Reuters, Ukraine carried out its largest ever drone attack on the Moscow area on Tuesday, resulting in at least one death, dozens of houses destroyed, and about 50 flights forced to divert from airports around Moscow.

Russia has stated that it has destroyed at least 20 Ukrainian attack drones that were hovering over the Moscow region at the time. The population of the region exceeds 21 million.

The Russian authorities stated that a 46 year old woman was killed in an attack on the outskirts of Ramenskoye; This is the first time that Russia has publicly announced the deaths in the Moscow region due to attacks in Ukraine.

Bringing war into Russia's homeland has become a key focus of Ukraine's strategy this summer, with the most prominent being the raid on the Kursk region of Russia, which occupied over 500 square miles of territory. At the same time, Ukraine has also increased its long-range strike efforts.

Ukraine's attacks on Russia's mainland have affected oil refineries, power plants, airports, and military factories. Ukrainian commentators have stated that the purpose of these attacks is to disrupt logistical support, gain a favorable position in possible peace talks, and contain Russia's attacks on Ukraine.

How to trade gold when the US CPI hits?

Analyst Christian Borjon Valencia pointed out that from a technical perspective, the price of gold is steadily rising, but it cannot break through the historical high of $2531 per ounce, as traders prepare for the key data to be released on Wednesday. Based on the momentum of the Relative Strength Index (RSI), gold is expected to continue trading sideways. The index is almost unchanged.

Valencia stated that if gold prices break through historical highs, the next resistance level will be $2550 per ounce. Once the latter is overcome, the next goal will be the psychological barrier of $2600 per ounce.