Gold Price Forecast: XAU/USD Slips Below $4,350 as CPI Miss Fuels 2026 Fed Cut Bets
Gold prices took a hit in early European trading, and the XAU/USD slipped under $4,350 as day traders got a bit trigger-happy...
Quick overview
- Gold prices fell in early European trading, with XAU/USD slipping below $4,350 as traders took profits from recent gains.
- The recent US inflation data showed a significant slowdown, raising hopes for potential future interest rate cuts by the Fed, which could benefit gold.
- Geopolitical tensions continue to provide support for gold, despite a generally optimistic market outlook.
- Technically, gold remains in a strong position, consolidating within a rising channel and holding above key moving averages.
Gold prices took a hit in early European trading, and the XAU/USD slipped under $4,350 as day traders got a bit trigger-happy and locked in some profits from the recent uptrend. And it’s not like this is a full-on turn in fortunes – the pullback is more about some light long liquidation in futures markets, rather than a fundamental shift in the broader picture.
The good news for gold is that the floor is still pretty solid. US inflation cooled down far more sharply than people were expecting in November, which has a lot of people thinking that the Fed might actually be able to cut interest rates again later on down the line – and that would be good news for gold. Lower interest rates mean gold doesn’t get pushed aside as a non-interest-bearing investment, which helps keep its medium-term appeal intact even if it is just hanging around in the short term.
CPI Surprise Strengthens Rate-Cut Narrative
The US Bureau of Labor Statistics just released the November CPI numbers, and headline inflation came in at 2.7%, well below the 3.1% expected. Core inflation was down to 2.6%, also below forecasts. This is some seriously clear evidence that inflation is slowing down.
As you might expect, markets reacted with a bit of caution – it’s not exactly euphoric, but people are starting to think that things might get easier for gold next year. Now that being said, short-term rate cuts are still a bit of a long shot – futures markets are only assigning a 26.6% chance of a cut at the next Fed meeting, according to CME FedWatch. But economists say the trend, not the timing, matters most.
BMO Capital Markets noted that the CPI slowdown “keeps the door open for further Fed easing” – and that’s historically been good news for gold, especially during periods when the Fed is just taking it easy.
Geopolitical Risk and Demand Offer a Floor
And then there’s the impact of all this on the global situation. Geopolitical tensions around energy shipping and global supply chains have been a steady support for gold lately – and even though markets are feeling more optimistic elsewhere, this is one part of the world that’s not exactly calming down.
Investors are also keeping an eye on upcoming US data – things like the University of Michigan Consumer Sentiment Index – to see if the inflation slowdown is actually starting to filter through to things like household spending.
Gold Technical Outlook: Bulls Still in Charge
Now, looking at the technical picture, gold is still looking pretty good. On the 4-hour chart, price is just consolidating within a rising channel, holding above the 50-day EMA at $4,291, and also above the 100-day EMA near $4,247 – and both of those lines are headed up.
levels of note:
- Resistance: If we get to $4,352, then watch out for $4,388
- Support: If we get to $4,308 next, then it’s onto $4,264 after that
- Momentum: the RSI is just sitting at 54, which is not quite in overbought territory, so the bulls still have a bit of room to run
Trade setup: Buy any pullbacks above $4,300, target $4,388, but keep a lid on losses under $4,260.
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