$4,150 remains a tough nut to crack for Gold as US CPI report looms
- Gold pauses recovery near $4,150 as sellers jump in amid pre-US CPI profit-taking.
- US Dollar licks wounds amid US-Iran optimism and falling Oil prices-led easing inflation concerns.
- Gold reclaimed key 21-day SMA support on the daily chart as RSI flipped bullish.
Gold is pulling back from three-week highs of $4,149 in Asia on Tuesday as traders seem to take profits ahead of critical US Consumer Price Index (CPI) data.
Gold eyes US CPI inflation for next big move
The retreat in Gold is also driven by a pause in the US Dollar (USD) sell-off as markets assess the latest diplomacy efforts between the United States (US) and Iran.
After meeting Qatar's prime minister, Sheikh Mohammed bin Abdulrahman bin Jassim Al Thani, on Monday, US President Donald Trump said: "Iran militarily is effectively over. We're just keeping it the status quo."
Sheikh Al-Thani said he had positive discussions with Trump and Vice President JD Vance on Monday.
These positive developments on the geopolitical front have smashed Oil prices and eased inflation concerns, emerging as the key catalyst behind the Greenback’s sharp correction at the start of the week.
That helped Gold stretch its recovery from yearly lows of $3,870, settling roughly 2% higher on Monday, well past the $4,100 level.
However, Gold is under renewed selling pressure early Tuesday, with traders turning cautious ahead of the US CPI release, one of the important inflation updates before the Federal Reserve’s (Fed) December 8-9 monetary policy meeting.
The headline monthly CPI is seen rising by 0.3% in October, slowing sharply from a 0.6% growth in September. Meanwhile, core CPI, excluding volatile items like food and energy prices, is expected to increase by 0.2% in the same period.
The Bureau of Labor Statistics (BLS) will not publish annual inflation readings amid data disruption caused by last year’s government shutdown.
Therefore, core inflation numbers are more important this time around, particularly as gasoline prices slowed their advance.
Any upside surprise to the monthly CPI and core CPI prints could seal in another December interest rate hike, lifting the US Treasury bond yields and the USD at the expense of non-yielding Gold.
Meanwhile, softer inflation data could push back against expectations for one final hike before the year-end, allowing Gold to extend its recovery.
All in all, the US CPI report will likely determine Gold’s next direction, but thinning liquidity heading into the Veterans Day bond-market holiday could play a pivotal role in post-CPI trades.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,115.14, holding a capped bias as it remains below the 50-day, 100-day and 200-day simple moving averages (SMAs) despite stabilizing over its 21-day SMA. The immediate trend backdrop is still heavy, but the 14-day Relative Strength Index hovering just above 50 hints at tentative recovery momentum as price consolidates after the recent pullback.
On the topside, a dense resistance band emerges around $4,185–4,190, where the 38.2% Fibonacci retracement at $4,185.36 clusters with the 50-day SMA at $4,187.32, followed by the 100-day SMA near $4,201.62 and the 50% retracement at $4,283.11; further up, the 61.8% retracement at $4,380.86 and the 200-day SMA near $4,455.43 guard the broader bearish structure. On the downside, initial support is seen at the 21-day SMA around $4,067.85, reinforced by the 23.6% retracement at $4,064.42, with the Fibonacci anchor low at $3,868.92 acting as a deeper floor if selling pressure resumes.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
