Gold consolidates near $3,650 ahead of US NFP benchmark revision

• Gold extends record-breaking rally to a fresh all-time high near $3,660, trading around $3,650 on Tuesday.
• Markets fully price in a September Fed rate cut after weaker-than-expected NFP, with a 25 bps move seen as certain.
• XAU/USD is consolidating just below record highs on the 1-hour chart, with RSI divergence signaling momentum fatigue.

Gold (XAU/USD) extends its record-breaking rally on Tuesday to a fresh all-time high near $3,660, marking the third straight day of gains and pushing into uncharted territory. At the time of writing, XAU/USD is trading around $3,650, up nearly 0.50% on the day.

A broadly weaker US Dollar (USD) has amplified the rally, making Gold more attractive for overseas buyers. At the same time, a string of disappointing US labor market readings has strengthened bets that the Federal Reserve (Fed) will cut borrowing costs at its September 16-17 meeting. The prospect of easier monetary policy is also driving demand for bullion, keeping investors' appetite firmly supported.

Steady central bank purchases are adding another layer of support, as major reserve holders diversify away from the US Dollar. Also, concerns over global trade frictions linked to US tariffs, alongside broader geopolitical tensions, are bolstering safe-haven flows into Gold. Meanwhile, uncertainty over the Fed's independence amid growing political pressure has heightened market anxiety. Altogether is helping to sustain demand for Gold amid broader risk aversion.

Looking ahead, traders will keep a close eye on the US Nonfarm Payrolls benchmark revision, due later at 14:00 GMT, which could reshape the labor market narrative. Early estimates point to a sharp downward adjustment, potentially erasing up to 800,000 jobs. A deeper revision would reinforce the view that the US economy is cooling more quickly than reported, further cementing the case for monetary policy easing and keeping Gold's bullish momentum intact.

Market movers: Markets eye US CPI, PPI as Fed rate cut bets mount

• The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, fell to a seven-week low -- its weakest level since July 24 -- before stabilizing near 97.40 at the time of writing. The index remains under pressure from a dovish Fed outlook, with markets expecting the central bank to prioritize maximum employment over price stability within its dual mandate, given that monetary policy is still moderately restrictive.
• US Treasury yields stabilized across the curve after a four-day slump that dragged rates to multi-month lows. The benchmark 10-year yield is holding around 4.06%, while the 30-year is hovering near 4.72% and the rate-sensitive 2-year yield sits at 3.50%. The recent drop in yields underscores the view that the US economy is losing momentum, adding pressure on the Fed to ease monetary policy sooner rather than later.
• Markets remain fully priced for a 25-basis-point rate cut at the September 16-17 meeting, but odds of a larger 50 bps move have risen to around 11% following the weak Nonfarm Payrolls (NFP) report, up from near zero just a week earlier, according to the CME FedWatch tool. Futures are also pricing in nearly 75 bps of cuts by year-end and about 140 bps of easing over the next twelve months, as per a report from BHH Marketview.
• France's Prime Minister François Bayrou lost a confidence motion in parliament on Monday, as widely expected, paving the way for his resignation. French President Emmanuel Macron's office said he would accept Bayrou's resignation and appoint a new prime minister in the coming days - his fourth prime minister since the June 2024 snap parliamentary election.
• US President Donald Trump signaled on Sunday readiness to launch a "second phase" of sanctions against Russia over its war in Ukraine. EU foreign policy chief António Costa confirmed on Monday that the bloc is preparing its 19th sanctions package in close coordination with Washington.
• All eyes are on the US Producer Price Index (PPI) due Wednesday, followed by the US Consumer Price Index (CPI) on Thursday, which will be key for the Fed's monetary policy path. Markets are looking for signs of disinflation, with forecasts pointing to only modest monthly gains. A softer set of readings would further cement expectations of rate cuts next week, while any upside surprise could temper dovish bets and weigh on Gold.

Technical analysis: XAU/USD consolidates near $3,650 as RSI divergence flashes caution

Gold (XAU/USD) is consolidating just below its record peak near $3,660 reached earlier on Tuesday, with intraday price action showing a tight range above $3,640 support. The 50-hour Simple Moving Average (SMA) at $3,613 and the 100-hour SMA at $3,581 are sloping higher, highlighting the underlying bullish bias.

Momentum indicators, however, are showing early signs of fatigue. The Relative Strength Index (RSI) at 67 on the 1-hour chart is flirting with overbought territory and has formed a bearish divergence, with price making higher highs while RSI records lower highs. The Moving Average Convergence Divergence (MACD) indicator on the same chart is still in positive territory, though its histogram shows waning strength, hinting at consolidation before the next leg higher.

A sustained break above $3,660 would pave the way for an advance toward $3,680-$3,700, while immediate support rests at $3,640. Below that, the 50-hour SMA at $3,613 and the $3,600 handle are key levels, followed by the 100-hour SMA at $3,581 and $3,575 as deeper downside cushions.