Gold Price Forecast: XAU/USD extends upside above $3,350 as traders ramp up rate cut bets

• Gold price drifts higher to near $3,365 in Thursday's early Asian session, adding 0.25% on the day. 
• Soft US inflation and jobs data prompted expectations for Fed rate reductions. 
• Easing trade tensions might dampen the demand for Gold, a safe-haven asset. 

The Gold price (XAU/USD) attracts some buyers to around $3,365 during the early Asian session on Thursday. The precious metal edges higher for the third consecutive day amid a weaker US dollar (USD). Traders will take more cues from the US Producer Price Index (PPI) and the weekly Initial Jobless reports, which will be released later on Thursday.

Mild US inflation data cemented expectations for a Federal Reserve (Fed) rate cut in the September meeting and raised the odds of additional reductions later this year. This, in turn, weighs on the Greenback and provides some support to the USD-denominated commodity price. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding yellow metal. 

"Gold is buoyant on heightened expectations of a September Fed rate cut, following benign CPI data and July's weak non-farm payrolls," said Nikos Tzabouras, senior market analyst at tradu.com. 

According to the CME FedWatch tool, markets are pricing in a 94% possibility of a September Fed cut after mild July inflation data signaled limited pass-through from US President Donald Trump's sweeping import tariffs.

Nonetheless, progress on the trade front might cap the upside for a traditional safe-haven asset like the yellow metal. US President Donald Trump on Monday agreed to delay implementing sweeping tariffs on China, extending another 90 days just hours before the last agreement between the world's two largest economies was due to expire.