- Gold price sits at two-week highs near $2,700 early Wednesday, awaiting US CPI data.
- Chinese central bank buying and Middle East tensions bolster the Gold price upswing.
- Gold price finds acceptance above 50-day SMA amid a bullish RSI on the daily chart.
Gold's price is on a solid recovery, flirting with two-week highs just above $2,700 early Wednesday. However, the further upside in gold price hinges on the release of the US Consumer Price Index (CPI) data, which will likely set the pace for the US Federal Reserve’s (Fed) early next year.
Gold price stays firm as US CPI report looms
Heading into the US CPI showdown, markets are pricing in an 86% chance that the Fed will lower interest rates by 25 basis points (bps) next week, according to the CME Group’s FedWatch Tool. Meanwhile, the odds for another quarter percentage point rate reduction in January stand at 22%.
Amidst looming tariffs announced by US President-elect Donald Trump and loosening labor market conditions, the US inflation report will be critical to determining the Fed’s easing trajectory in the coming months. This will impact the value of the US Dollar (USD) and the non-yielding Gold price.
US CPI is seen rising 2.7% year-on-year (YoY) in November after reporting a 2.6% growth in October. The core annual inflation will likely remain at 3.3% in the same period. On a monthly basis, US CPI and core CPI are expected to have increased by 0.3% last month.
Gold price has witnessed an impressive recovery from eight-day lows so far this week, sitting at the highest level since November 25. This is courtesy of the ongoing Middle East geopolitical tensions and the resumption of the People’s Bank of China (PBOC) buying gold reserves.
The Chinese central bank on Saturday said it bought 160,000 fine troy ounces in November, ending a six-month pause in purchases. Meanwhile, the sudden collapse of the Syrian government over the weekend rattled markets, with investors scurrying for safety in the traditional store of value Gold price.
According to the latest developments, Israel Defense Forces (IDF) carried out attacks on Syria's naval fleet as part of its efforts to neutralise military assets in the country after the fall of the Assad regime, per BBC News.
Gold price technical analysis: Daily chart
The daily chart shows that the Gold price broke the consolidative phase to the upside after recapturing the key 50-day Simple Moving Average (SMA) at $2,670 on a daily closing basis on Tuesday.
The 14-day Relative Strength Index (RSI) points north above the midline, suggesting that more gains remain in the offing.
A softer-than-expected US CPI inflation data could reinforce Fed rate cut expectations in the coming months, driving Gold price toward the November 25 high of $2,721.
The next bullish target is $2,750, the confluence of the psychological barrier and the November 5 high.
Fresh buying opportunities will likely emerge on a sustained move above the latter, calling for a test of the record high of $2,790.
In case the inflation data surprises to the upside, Gold price could face fresh headwinds, with sellers likely to test the 50-day SMA resistance-turned-support at $2,670.
The next relevant downside cap is seen at the 21-day SMA at $2,638, below which the previous week’s low of $2,613 will be challenged.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD keeps the red near 1.0500 amid market caution ahead of US CPI
EUR/USD holds losses near 1.0500 in the European session on Wednesday. The pair faces headwinds from a cautious market mood and resurgent US Dollar demand, as traders expect an uptick in the US inflation data that could impact the Fed's easing trajectory while the ECB remains on track for more rate cuts.
GBP/USD drops below 1.2750, awaits US inflation data
GBP/USD is back in the red below 1.2750 in European trading on Wednesday. The Pound Sterling loses traction amid renewed US Dollar buying as risk sentiment worsens heading into the key US CPI showdown. The US inflation data is key to gauging the pace of Fed's future rate cuts.
Gold price steadies below $2,700 as traders seem reluctant ahead of US inflation data
Gold price seems to have stabilized following good two-way intraday price swings and currently trades around the $2,690 area, below a two-week high touched earlier this Wednesday. Expectations that the Fed will adopt a cautious stance on cutting rates continue to push the US Treasury bond yields.
US CPI set to grow at faster pace in November, edging further away from Fed target
The US Consumer Price Index report for November, a key measure of inflation, will be unveiled at 13:30 GMT by the Bureau of Labor Statistics. Markets are buzzing in anticipation, as the release could trigger significant swings in the US Dollar and influence the Federal Reserve's plans for interest rates in the months ahead.
How the US-China trade dispute is redefining global trade
Since Donald Trump took office in 2017, trade flows and market shares have changed substantially. We think that shift is set to continue under looming tariffs and a new protectionist environment.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.