- Gold's rally pauses below $2,700 as markets focus on November's US CPI data.
- Expectations of persistent inflationary pressures could strengthen the USD.
- XAU/USD maintains a bullish outlook, trading above the previous two weeks' range.
Gold (XAU/USD) is holding steady on Wednesday after a 2.5% rally over the past three sessions. The precious metal remains capped below the $2,700 psychological level during the early Asian session, as market participants exercise caution ahead of the US Consumer Price Index (CPI) release at 13:30 GMT.
November's CPI is expected to highlight persistent inflationary pressures, with headline inflation forecasted to rise 0.3% monthly and 2.7% yearly, up from October's 0.2% and 2.6%. Core CPI is anticipated to maintain steady growth at 0.3% monthly and 3.3% annually. While the data is unlikely to deter the Federal Reserve (Fed) from a 25-bps rate cut next week, it could signal a more measured easing path into 2025.
Tensions in the Middle East continue to support safe-haven demand for Gold. In Syria, rebels have appointed Mohammed al-Bashir as transitional prime minister, while Israel has intensified strikes on Syrian military facilities. The geopolitical uncertainty sustains interest in Gold as a hedge against risk.
Daily Digest Market Movers: Gold Rally Takes a Breather
- Inflation Expectations: November's US CPI is expected to confirm that inflation remains above the Fed's 2% target, keeping pressure on monetary policy.
- Fed Rate Cuts: The CME FedWatch Tool indicates an 86% probability of a 25-bps rate cut at the Fed's December 17–18 meeting, with two to three additional cuts expected in 2025.
- Geopolitical Risks: Continued tensions in the Middle East bolster safe-haven flows into Gold, with uncertainty around Syria's transitional government.
- Central Bank Activity: The Bank of Canada (BoC) is poised for a 50-bps cut today, while the Swiss National Bank (SNB) and European Central Bank (ECB) are expected to reduce rates by 25 bps on Thursday.
Technical Analysis: XAU/USD Holds Firm Below $2,700
Gold's recent rally paused, constrained by a firming US Dollar and rising US Treasury yields. However, the broader trend remains bullish, with support established above $2,675, the top of the previous two weeks' trading range.
Above $2,700, key levels include the November 24 high at $2,720 and the cluster of November 4–6 highs near $2,750.
Initial support lies at the intra-day low of $2,675, followed by the December 9 low at $2,630 and the channel bottom near $2,610, defined by the November 26 and December 5 lows.
Gold's consolidation phase suggests a wait-and-see approach from investors as they gauge inflation trends and geopolitical risks, keeping the precious metal’s broader uptrend intact.
XAU/USD 4-Hour Chart
