- Gold prices spike up but remain little changed after the release of US CPI data
- All eyes are now on The Fed’s interest rate projections and Chairman Powell’s press conference.
- Gold’s near-term bias remains negative, with hopes of Fed cuts ebbing.
Gold prices (XAU/USD) ticked higher on Tuesday following the release of the US Consumer Prices Index (CPI) report, which has triggered a cautious optimism ahead of Wednesday’s Federal Reserve’s (FED) Monetary policy decision.
The precious metal, however, remains practically flat on the day with bullish attempts capped below the $2,000 psychological level, and sellers contained at the $1,980 support area.
US Inflation has met the market expectations except for the monthly CPI, which remained flat in November, against the 0.1% increment foreseen by the market. The 3.1% yearly increase in the headline inflation and the 4% year-on-year core inflation do not change significantly the outlook for Wednesday’s Fed meeting.
The US Central Bank is widely expected to leave its benchmark interest rate on hold at the current 5.25%-5.5% band and put the focus on the interest rate projections for next year and on Fed Chairman Jerome Powell’s press conference. Investors will be looking for dovish hints on Powell’s comments to revive hopes of rate cuts in early 2024, which would give a fresh boost to Gold prices.
Daily Digest Market Movers: Gold remains little moved after US CPI data
- US CPI has remained flat in November and increased 3.1% year on year. The core CPI remains steady at 4%, in line with the market consensus.
- US Treasury yields have seen a moderately positive reaction, with the benchmark 10-year note increasing by 15 basis points after the CPI release.
- US inflation data does not change the market's view on the Federal Reserve’s policy outlook. The market keeps pricing a 45% chance of Fed rate cuts in March, while the odds for a May rate cuts are evenly split, according to the CME Group FedWatch tool.
- Gold prices have found some support on Tuesday after a two-day decline, favoured by softer US yields and a weaker US Dollar ahead as we head into Wednesday’s Fed monetary policy decision.
- Geopolitical tensions continue growing amid news of attacks to the US troops in the Middle East by Iran-backed groups. This provides some support to precious metals on the back of their safe-haven status.
Technical Analysis: Gold remains on the defensive, with $1,980 support under pressure
The technical picture for Gold remains bearish, with upside attempts capped well below the $2,000 psychological level. Price action has broken below the main Simple Moving Averages (SMAs) in the 4-hour charts, which leaves the $1,980 support level under increasing bearish pressure.
The mentioned $1,980 is the neckline of a head and shoulders (H&S) pattern and the 50% Fibonacci retracement of the October - December rally. Below here, the next targets would be mid-November lows at $1,934, ahead of $1,838, and the measured target of the H&S pattern at $1,851.
A bullish reversal from current levels would have to breach the $2,000 level to ease negative pressure and shift the pair’s focus towards $2,035 and $2,075.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.32% | -0.15% | -0.13% | -0.36% | -0.57% | -0.41% | -0.45% | |
| EUR | 0.32% | 0.19% | 0.21% | -0.04% | -0.28% | -0.10% | -0.15% | |
| GBP | 0.15% | -0.18% | 0.03% | -0.23% | -0.44% | -0.27% | -0.33% | |
| CAD | 0.11% | -0.18% | -0.01% | -0.22% | -0.47% | -0.31% | -0.35% | |
| AUD | 0.36% | 0.05% | 0.22% | 0.25% | -0.24% | -0.06% | -0.12% | |
| JPY | 0.56% | 0.24% | 0.42% | 0.45% | 0.22% | 0.13% | 0.11% | |
| NZD | 0.40% | 0.11% | 0.28% | 0.30% | 0.06% | -0.18% | -0.05% | |
| CHF | 0.45% | 0.15% | 0.33% | 0.36% | 0.11% | -0.13% | 0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Economic Indicator
United States Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Why it matters to traders
The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
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
AUD/USD: Further gains need more conviction
AUD/USD reversed two-daily pullbacks in a row on Tuesday, staging a decent comeback from Monday’s troughs near 0.6220 to the boundaries of the 0.6300 hurdle propped up by the RBA hawkish hold and firm data from Chinese business activity.
EUR/USD remains offered below 1.0800 ahead of “Liberation Day”
EUR/USD came under extra downside pressure on Tuesday, returning to the sub-1.0800 region on the back of tepid gains in the US Dollar and rising caution prior to Trump’s announcements on Wednesday.
Gold nears $3,100 as fears receded
Gold is easing from its fresh record high near $3,150 but remains well supported above the $3,100 mark. A generalised pullback in US yields is underpinning the yellow metal, as traders stay on the sidelines awaiting clarity on upcoming US tariff announcements.
Bitcoin just as vulnerable as major assets – Anthony Yeung, Global Head of Strategic Development at CoinCover
Bitcoin trades under the $85,000 mark, holding on to nearly 3% gains on Tuesday ahead of Donald Trump’s Liberation Day. Crypto traders remain fearful, the sentiment reads 34 on a scale of 0 to 100 on the Fear & Greed Index.
Is the US economy headed for a recession?
Leading economists say a recession is more likely than originally expected. With new tariffs set to be launched on April 2, investors and economists are growing more concerned about an economic slowdown or recession.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.