Gold corrects slightly ahead of US CPI
Gold price (XAU/USD) trades 0.4% lower near $4,320 during Thursday’s European session, though it remains close to its all-time high of $4,381. The precious metal faces mild pressure as the United States Dollar (USD) strengthens ahead of the Consumer Price Index (CPI) data for November, scheduled for release at 13:30 GMT.
At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is up 0.15% near 98.55.
Technically, a stronger United States Dollar makes gold a more expensive bet for investors, reducing its appeal in the short term.
Market participants are closely watching the United States inflation data, which will shape expectations for the Federal Reserve’s monetary policy outlook. Headline inflation is expected to have accelerated to 3.1% YoY from 3% in October, while core CPI (excluding food and energy) is projected to remain steady at 3%.
Sticky price pressures would dampen dovish expectations for the Fed, while softer figures could reinforce them.
Although gold typically performs well in high-inflation environments, fading speculation about Fed rate cuts could weigh on non-yielding assets like gold.
Currently, the CME FedWatch tool shows a 24.4% probability that the Federal Reserve will cut interest rates by 25 basis points to the 3.25%–3.50% range at its January meeting.
Gold trades near $4,324.56 on Thursday, holding firmly above the rising 20-day Exponential Moving Average (EMA), now at $4,230.13. The widening spread between spot price and EMA confirms trend strength.
The 14-day Relative Strength Index (RSI) at 68.96 sits just below overbought territory after easing from 72.44, indicating strong but cooling momentum.
If buyers maintain price action above the rising EMA, the path of least resistance remains higher. However, momentum may pause as RSI cools from the high-60s. A pullback toward the 20-day EMA would meet initial trend support, while sustained closes above the short-term mean would preserve upside extension. RSI near 70 warns of stretched conditions, so shallow dips may emerge before trend continuation.