- Gold struggles to advance despite intraday gains ahead of the December CPI release.
- Speculation about gradual US tariff policies and disinflationary expectations provide support for Gold.
- Gold could surge above $2,700 if the CPI shows significant disinflation.
Gold (XAU/USD) is unable to turn positive this week, despite a two-day rally above $2,680 on Wednesday, following a softer-than-expected US Producer Price Index (PPI) release, which led to a significant easing in US yields. Market expectations are now rising for a softer US Consumer Price Index (CPI) release this Wednesday, which would be favorable for Gold to push higher.
On the economic front, all eyes are on the US CPI release for December, scheduled for Wednesday. Following the unexpected softer PPI data on Tuesday, market consensus is that both the headline and core CPI readings will show a decline from their previous figures. Additionally, comments from three Federal Reserve officials later in the day will be closely watched.
Daily Market Digest: Focus on Inflation
- President-elect Donald Trump did not comment on or refute rumors suggesting his administration might implement its tariff plans in a gradual, steady manner.
- The US 10-year benchmark rate has fallen to 4.757% at the time of writing on Wednesday, retreating from a 14-month high of 4.802% reached on Monday.
- According to the CME FedWatch Tool, markets expect the Federal Reserve to maintain steady rate expectations until its meeting on June 18, with a 43.6% chance of no change in rates, compared to a 56.4% likelihood of a rate cut.
- The US Consumer Price Index (CPI) data for December will be released at 13:30 GMT. The core CPI is expected to rise by 0.2%, down from 0.3% the previous month, while the headline CPI is anticipated to increase by 0.3%.
- At 14:00 GMT, Federal Reserve Bank of Chicago President Austan Goolsbee will discuss the economy at the Wisconsin Bankers Association 2025 Midwest Economic Forecast Forum.
- At 15:00 GMT, Minneapolis Fed President Neel Kashkari will offer welcoming remarks and join a fireside chat with Jay Debertin, President and CEO of CHS, Inc., during the Minneapolis Fed’s 2025 Regional Economic Conditions Conference.
- At 16:00 GMT, Federal Reserve Bank of New York President John Williams will deliver keynote remarks at the "CBIA Economic Summit and Outlook 2025" event hosted by the Connecticut Business and Industry Association (CBIA) in Connecticut.
Technical Analysis: Stay Calm Amidst Volatile Trading
Gold bulls have successfully avoided re-entering the pennant chart pattern, pushing prices back above the descending trendline. From this point forward, Bullion appears poised for a breakout. This Wednesday's CPI release could act as a catalyst to fuel further momentum.
On the downside, the 55-day Simple Moving Average (SMA) at $2,648 serves as initial support. Below that, the 100-day SMA at $2,638 is the next key level. Ultimately, the ascending trendline at the lower boundary of the pennant, currently at $2,618, should provide further support and prevent a sharper decline.
On the upside, the low from October 23 at $2,708 is the next significant resistance level to watch. Once that is cleared, though still some distance away, the all-time high of $2,790 remains the key upside target.
