Gold Price Forecast: Will US CPI data fuel another XAU/USD record rally?
- Gold hovers around $4,600 early Tuesday, as buyers take a breather ahead of US CPI data.
- The US Dollar holds its recovery amid the Fed’s independence concerns, receding rate cut bets.
- Technically, Gold remains a ‘buy-the-dips’ trade, with RSI still flirting with the overbought region.
Gold is treading water near the $4,600 threshold early Tuesday, as buyers catch a breather after Monday’s rally to fresh record highs of $4,630. All eyes now turn to the US Consumer Price Index (CPI) inflation data due later in the North American Session for fresh trading impetus.
Gold awaits US CPI inflation for a fresh impetus
Amidst concerns over the US Federal Reserve’s (Fed) independence and escalating geopolitical tensions between the US and Iran, the sentiment surrounding Gold remains bullish.
However, traders resort to repositioning and take profits off the table heading into the crucial US CPI release later in the day.
The US Core Consumer Price Index is expected to rise by 2.7% on an annual basis in December. The monthly core CPI is set to increase by 0.3% in the same period after reporting a 0.2% growth in November. Meanwhile, the headline CPI inflation is expected to hold steady at 2.7%.
Inflation in the US remains well above the Fed’s target of 2%, and hence the data holds utmost importance in gauging whether the Fed will push back interest rate cuts into the second half of this year.
Hotter-than-expected US annual headline and core CPI readings could price out a Fed rate cut in the first quarter, providing legs to the ongoing US Dollar (USD) recovery while fuelling a Gold price correction toward $4,480 initial demand area.
On the other hand, a surprise downtick in the inflation data would revive bets for a rate reduction in the March or April Fed policy meeting. In such a case, the USD could see a fresh leg lower, driving Gold to fresh record highs toward $4,700.
However, any reaction to the US CPI data could be short-lived in the face of geopolitical developments and worries over the Fed’s autonomy, which will remain key drivers affecting Gold in the coming days.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,594.62. The 21-day Simple Moving Average (SMA) climbs above the 50-, 100- and 200-day SMAs, signaling firm bullish momentum, and price holds above all of them to reinforce a positive tone. The 14-day Relative Strength Index stands at 70.17 (overbought), which could usher a pause or shallow pullback. The 21-day SMA at $4,417.93 offers immediate dynamic support, with the advance intact while above it.
Longer-term SMAs continue to rise, with the 50-day above the 100- and 200-day ones, underscoring buyers’ control as the uptrend extends. The pair trades comfortably above the 50-day SMA, maintaining an upward structure. The 50-day SMA at $4,255.76 serves as secondary support, while a drop through it would expose the 100-day SMA at $4,044.74. As long as price holds above these supports, dips would remain shallow and the path of least resistance would point higher.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
Consumer Price Index ex Food & Energy (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Tue Jan 13, 2026 13:30
Frequency: Monthly
Consensus: 2.7%
Previous: 2.6%
Source: US Bureau of Labor Statistics
The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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.
