US CPI Determines Market Direction Tonight
Gold (XAU/USD) fell to around 4,715, slightly below the previous pivot area, ahead of tonight's US CPI release. This movement suggests the market is starting to take a more defensive stance, especially as the dollar tends to strengthen and inflation risks from energy continue to overshadow interest rate expectations.
Fundamentally, gold remains in a tug-of-war: Middle East tensions and the Hormuz issue keep its hedging function relevant, but high oil prices also amplify inflation risks, making the market more cautious about pricing in interest rate cuts. As long as the "rates higher for longer" narrative persists, gold is likely to struggle to rally without the support of a weakening dollar/yield.
From a technical perspective, 4,700 is a psychological level and the closest support, which is now increasingly important as prices approach. As long as prices remain above 4,700, the market typically interprets this as a consolidation phase ahead of major data, rather than a decisive breakdown.
If the CPI comes in higher than expected, pressure on gold typically increases through a strengthening dollar and yields. In this scenario, the risk of a test of 4,700 increases; if it breaks and holds below it, the next areas of concern are 4,680, then 4,650–4,600.
If the CPI is lower than expected, gold has the potential to rebound as the dollar/yield tends to weaken. The initial focus will be on whether the price can return above 4,726–4,730 (the pivot area) and then challenge 4,750; a breakout could open up upside to 4,780–4,800.
The key confirmation after the data release remains the same: monitor the response of the DXY (dollar) and the US 10Y yield in the first 5–30 minutes. If both move strongly in the same direction, gold's direction is usually more clearly "locked in" for the next session. (asd)*
Source: Newsmaker.id
