US CPI Data Reinforces Rate Cut Expectations; Gold Price Hit Monthly High

The gold market has ushered in a new round of rising tide, with the release of the latest US Consumer Price Index (CPI) data. 

On December 12, spot gold price rose for the fourth consecutive trading day, rising by more than $20. The highest hit was $2,720.98 per ounce, which was only slightly lower than the monthly high of $2,721.21 per ounce set on November 25.

This significant rise was mainly due to U.S. inflation data that was in line with market expectations, enhancing investors' expectations for a rate cut by the Federal Reserve next week. At the same time, the market is also looking forward to the upcoming US Producer Price Index (PPI) data to obtain further guidance on monetary policy.

Data released by the U.S. Department of Labor showed that U.S. CPI increased by 0.3% month-on-month in November and 2.7% year-on-year. The increase in October was 2.6%. This data is consistent with economists polled by Reuters who had expected CPI to rise by 0.3% month-on-month and 2.7% year-on-year.

David Meger, director of metals trading at High Ridge Futures, said the mild CPI data was in line with expectations and suggested that inflation was stable rather than rising further. This almost guarantees that the Fed will cut interest rates at the next FOMC meeting.

CME's FedWatch tool shows traders are predicting a 98% chance of a 25 basis point rate cut by the Fed at its Dec. 17-18 meeting. Before the release of the inflation report, this possibility was about 86%.

Marc Chandler, chief market strategist at Bannockburn Forex, said the market is confident that the Federal Reserve will cut interest rates next week. Because the Fed rarely goes against the market when market expectations are so strong.

The Bank of Canada announced on Wednesday that it would cut its key policy interest rate by 50 basis points to 3.25%. This move reduces the opportunity cost of holding gold.

At the same time, the European Central Bank is widely expected to cut interest rates on Thursday and may further ease monetary policy in 2025, as inflation in the euro zone is close to target but economic growth is weak. The trend of interest rate cuts by global central banks is expected to continue to support gold price.

Geopolitical uncertainty is also one of the factors driving gold prices higher this week.

The IDF has seized several tanks and other military equipment during recent operations in the buffer zone in southern Syria, while continuing to operate within the buffer zone. The Russian Foreign Ministry also stated that it will not make concessions on the Ukrainian issue. These geopolitical dynamics deserve investors' attention.

It should be noted that the U.S. dollar index and U.S. Treasury yields remain relatively strong, which may limit gold's upside.

The U.S. dollar index rose 0.23% on Wednesday to close at 106.25, rising for four consecutive trading days;

The U.S. 10-year Treasury bond yield rose 1.23% to close at 4.273%, hitting a new high in the past week.

In addition to PPI data, investors also need to pay attention to changes in the number of initial jobless claims in the United States. At the same time, news related to Trump and the acceleration of geopolitics should also be taken into consideration.

In November, the U.S. CPI increased at the highest month-on-month rate in seven months, and rental growth momentum weakened, which brought a ray of optimism to the inflation outlook. While progress in controlling inflation has been limited, investors have taken comfort from the fact that rent cost increases have slowed and core inflation has not worsened.

Financial markets have almost fully priced in a 25 basis point rate cut by the Federal Reserve at its December 17-18 policy meeting. The Fed is expected to cut interest rates next week but will signal they are not locked in cutting rates at every meeting. They will have to continue to watch the data and ultimately need to see more downward momentum in inflation.

Traders believe the Fed may pause interest rate cuts in January. The path for interest rates then will likely depend on how quickly the new Trump administration introduces policies and when the impact of those policies starts to be seen in economic data.

Fundamental Analysis

COMEX gold prices are currently fluctuating around $2,669. The market is paying close attention to the Federal Reserve's upcoming interest rate decision to determine the next move. Currently, the U.S. dollar index has not yet broken through its box pressure. The release of US retail sales data within the day will be the focus of attention.

In the short term, gold prices are suppressed by the moving average, and there is a risk of falling below the box support again. Investors need to be wary of the "Buy the Rumor, Sell the Fact" phenomenon that may occur after the Fed's interest rate decision is announced.

Technical Analysis

From a technical analysis perspective, the daily chart of gold shows that price has fallen below moving average support. And the MACD indicator showed a second dead cross. If the green column volume of MACD can continue to grow, gold may accelerate its decline.

The dividing line between long and short during the day is located at $2,685. If it can hold firm at this price, gold is expected to continue to rebound and test the convergence pressure above $2,700; if it fails to break through $2,865, it may drop to the support level near $2,620. At present, we are mainly waiting and watching, waiting for the final implementation of the Fed's interest rate decision.

On the 4-hour chart level, gold has yet to show a clear directional choice. The moving average has not yet clearly turned downward, but the MACD indicator shows signs of stopping the decline. Investors need to pay attention to whether gold prices can pull back to around $2,690 to confirm the effectiveness of the pressure. If the price falls below $2,660, there may be a risk of accelerating the decline.

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The gold market has ushered in a new round of rising tide, with the release of the latest US Consumer Price Index (CPI) data. 

On December 12, spot gold price rose for the fourth consecutive trading day, rising by more than $20. The highest hit was $2,720.98 per ounce, which was only slightly lower than the monthly high of $2,721.21 per ounce set on November 25.

This significant rise was mainly due to U.S. inflation data that was in line with market expectations, enhancing investors' expectations for a rate cut by the Federal Reserve next week. At the same time, the market is also looking forward to the upcoming US Producer Price Index (PPI) data to obtain further guidance on monetary policy.

Data released by the U.S. Department of Labor showed that U.S. CPI increased by 0.3% month-on-month in November and 2.7% year-on-year. The increase in October was 2.6%. This data is consistent with economists polled by Reuters who had expected CPI to rise by 0.3% month-on-month and 2.7% year-on-year.

David Meger, director of metals trading at High Ridge Futures, said the mild CPI data was in line with expectations and suggested that inflation was stable rather than rising further. This almost guarantees that the Fed will cut interest rates at the next FOMC meeting.

CME's FedWatch tool shows traders are predicting a 98% chance of a 25 basis point rate cut by the Fed at its Dec. 17-18 meeting. Before the release of the inflation report, this possibility was about 86%.

Marc Chandler, chief market strategist at Bannockburn Forex, said the market is confident that the Federal Reserve will cut interest rates next week. Because the Fed rarely goes against the market when market expectations are so strong.

The Bank of Canada announced on Wednesday that it would cut its key policy interest rate by 50 basis points to 3.25%. This move reduces the opportunity cost of holding gold.

At the same time, the European Central Bank is widely expected to cut interest rates on Thursday and may further ease monetary policy in 2025, as inflation in the euro zone is close to target but economic growth is weak. The trend of interest rate cuts by global central banks is expected to continue to support gold price.

Geopolitical uncertainty is also one of the factors driving gold prices higher this week.

The IDF has seized several tanks and other military equipment during recent operations in the buffer zone in southern Syria, while continuing to operate within the buffer zone. The Russian Foreign Ministry also stated that it will not make concessions on the Ukrainian issue. These geopolitical dynamics deserve investors' attention.

It should be noted that the U.S. dollar index and U.S. Treasury yields remain relatively strong, which may limit gold's upside.

The U.S. dollar index rose 0.23% on Wednesday to close at 106.25, rising for four consecutive trading days;

The U.S. 10-year Treasury bond yield rose 1.23% to close at 4.273%, hitting a new high in the past week.

In addition to PPI data, investors also need to pay attention to changes in the number of initial jobless claims in the United States. At the same time, news related to Trump and the acceleration of geopolitics should also be taken into consideration.

In November, the U.S. CPI increased at the highest month-on-month rate in seven months, and rental growth momentum weakened, which brought a ray of optimism to the inflation outlook. While progress in controlling inflation has been limited, investors have taken comfort from the fact that rent cost increases have slowed and core inflation has not worsened.

Financial markets have almost fully priced in a 25 basis point rate cut by the Federal Reserve at its December 17-18 policy meeting. The Fed is expected to cut interest rates next week but will signal they are not locked in cutting rates at every meeting. They will have to continue to watch the data and ultimately need to see more downward momentum in inflation.

Traders believe the Fed may pause interest rate cuts in January. The path for interest rates then will likely depend on how quickly the new Trump administration introduces policies and when the impact of those policies starts to be seen in economic data.

Fundamental Analysis

COMEX gold prices are currently fluctuating around $2,669. The market is paying close attention to the Federal Reserve's upcoming interest rate decision to determine the next move. Currently, the U.S. dollar index has not yet broken through its box pressure. The release of US retail sales data within the day will be the focus of attention.

In the short term, gold prices are suppressed by the moving average, and there is a risk of falling below the box support again. Investors need to be wary of the "Buy the Rumor, Sell the Fact" phenomenon that may occur after the Fed's interest rate decision is announced.

Technical Analysis

From a technical analysis perspective, the daily chart of gold shows that price has fallen below moving average support. And the MACD indicator showed a second dead cross. If the green column volume of MACD can continue to grow, gold may accelerate its decline.

The dividing line between long and short during the day is located at $2,685. If it can hold firm at this price, gold is expected to continue to rebound and test the convergence pressure above $2,700; if it fails to break through $2,865, it may drop to the support level near $2,620. At present, we are mainly waiting and watching, waiting for the final implementation of the Fed's interest rate decision.

On the 4-hour chart level, gold has yet to show a clear directional choice. The moving average has not yet clearly turned downward, but the MACD indicator shows signs of stopping the decline. Investors need to pay attention to whether gold prices can pull back to around $2,690 to confirm the effectiveness of the pressure. If the price falls below $2,660, there may be a risk of accelerating the decline.

Trade gold/crude oil/silver ,etc Online Global Trending Precious Metals and Commodities

Start Trading Now >

New Client can claim a $100 reward!