- Gold rebounds from weekly low, fueled by hopes for looser Fed policy after weak PPI.
- Focus on upcoming CPI; cooler report could boost chances for rate cuts.
- Potential Trump tariffs pose a risk to inflation, impacting Gold and market sentiment.
Gold prices edged higher on Tuesday after data from the United States (US) showed that prices paid by producers cooled off. This kept traders hopeful for additional monetary policy easing by the US Federal Reserve (Fed). At the time of writing, the XAU/USD trades at $2,675, up 0.46%.
The yellow metal recovered after beginning the week on the back foot, down over 1%. The US Bureau of Labor Statistics (BLS) revealed that the Producer Price Index (PPI) increased but missed estimates for a higher print. This exacerbated Gold’s jump as traders grew optimistic that if the Consumer Price Index (CPI) report on Wednesday comes cooler than foreseen, it could increase the Fed’s chances of easing policy during the year.
Market participants are eyeing the CPI release on Wednesday. If December prints are below the prior month’s 2.7% number, it could indicate that the disinflation process continues. Inflation has risen since October to 2.6%, following September’s 2.4% YoY increase.
Traders had priced in 29.4 basis points of easing by the Federal Reserve in 2025. But a cool CPI report could bolster bullion prices.
Earlier, Kansas City Fed President Jeffrey Schmid stated that the Fed would act if Trump’s tariffs threw inflation or jobs off course.
In six days, US President-elect Donald Trump will take office. He has threatened to impose universal tariffs, though focused mainly on China, Canada and Mexico. If he goes ahead with this, analysts have mentioned that a trade war could reignite inflation.
Bullion prices are also taking a hit amid good news of a possible deal that could end Gaza's war, according to Reuters, which cited an official briefed on the matter.
In the US, key data releases include consumer inflation figures, Retail Sales and jobless claims for the week ending January 11.
Daily digest market movers: Gold price advances on steady US yields
- Gold price shrugs off higher US real yields, which remain at around 2.34%.
- The US Dollar retreated after the data, with the US Dollar Index (DXY) hitting 109.21, down 0.26%.
- The US 10-year Treasury bond yield remains unchanged at 4.794%.
- The US PPI in December rose 3.3% YoY, below forecasts of 3.4%. Excluding volatile items, the so-called Core PPI expanded by 3.5% YoY, up from November’s figures but beneath 3.8% expectations.
XAU/USD technical outlook: Gold price soars above $2,650 as bulls stepped in
Gold price uptrend resumed after a ‘bearish engulfing’ chart pattern formed, inviting buyers to step in and increase prices. If Bullion clears $2,700, the next resistance would be the December 12 peak of $2,726, followed by the record high at $2,790.
Conversely, if XAU/USD drops below $2,650, the next support would be the 50-day Simple Moving Average (SMA) at $2,643, followed by the 100-day SMA at $2,633.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks

AUD/USD depreciates due to market caution ahead of US NFP
The Australian Dollar remains subdued against the US Dollar for the second consecutive day on Friday. The AUD/USD pair faces modest headwinds as the USD steadies ahead of the upcoming Nonfarm Payrolls report in the North American session.

USD/JPY: Japanese Yen stands firm near a multi-month high against a broadly weaker USD
The Japanese Yen continues to be underpinned by increasing bets for more BoJ rate hikes. Trade tariff jitters and the risk-off mood further seem to underpin demand for the safe-haven JPY. Expectations for further policy easing by the Fed weigh on the USD and the USD/JPY pair.

Gold price remains depressed ahead of US NFP; trade jitters to limit losses
Gold price trades with negative bias for the second straight day, though a combination of factors continues to act as a tailwind ahead of the crucial US NFP report later this Friday. Rising trade tensions continue to weigh on investors' sentiment.

Crypto AI Tokens: Why FET, NEAR and RNDR could outperform BTC after White House Summit
The White House Crypto Summit is scheduled to hold on Friday. Rather than double-down on BTC, sector-wide price trends show that investors are leaning towards Crypto AI altcoins.

Make Europe great again? Germany’s fiscal shift is redefining the European investment playbook
For years, Europe has been synonymous with slow growth, fiscal austerity, and an overreliance on monetary policy to keep its economic engine running. But a major shift is now underway. Germany, long the poster child of fiscal discipline, is cracking open the purse strings, and the ripple effects could be huge.

The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.