Gold Shakes Ahead of CPI Rise Again or Is It Going to Fall?
Gold prices (XAU/USD) weakened slightly in the Asian session on Thursday, falling to $4,324/oz. This weakening was largely due to profit-taking after gold briefly touched its highest level in about seven weeks.
Additional pressure came from the rebounding US dollar. When the USD strengthens, gold typically becomes less attractive in the short term because it feels more expensive for non-dollar buyers.
However, gold's decline is unlikely to continue. The latest US employment data still signals a cooling job market, keeping expectations of a Fed interest rate cut alive. When interest rates fall, gold typically benefits because it doesn't pay interest (its opportunity cost is lower).
From a geopolitical perspective, tensions also act as a buffer. The situation escalated after Venezuela deployed its navy to escort oil vessels amid threats of a blockade from the US. Such conditions often encourage capital flows to safe-haven assets, including gold.
The market is now focusing on the November US inflation (CPI) data, released Thursday evening, plus Initial Jobless Claims. Consensus estimates a headline CPI of 3.1% YoY and a core CPI of 3.0% YoY—these figures have the potential to trigger major moves for the USD, yields, and gold within minutes.
Predicted Scenario 1: If the CPI releases lower than expected (cooler), the market could become more confident that the Fed has room to ease policy. Under these conditions, the USD is likely to weaken, and gold has the opportunity to rebound quickly, potentially breaking through the $4,350 area and testing the previous peak zone around the $4,380s.
Predicted Scenario 2: If the CPI is higher than expected (hotter), the likelihood of an interest rate cut could be considered a step back, the USD will strengthen, and gold will be vulnerable to a correction. The potential pullback area is usually around $4,330 first, and under strong pressure, it could expand to $4,300. CPI releases often experience rapid up-and-down movements (whipsaw), so the initial reaction may not necessarily be the final direction of the session. (asd)
Source: Newsmaker.id
