Gold Hits $4,639 as CPI Cools: Can Bulls Push XAU/USD Toward $4,680?
Gold prices just keep on running with the bulls, taking **XAU/USD all the way up to an intraday high of $4639 before taking a bit...
Quick overview
- Gold prices have surged to an intraday high of $4639, driven by expectations of falling US interest rates following softer inflation data.
- The latest US CPI report indicates easing price pressures, with core inflation at its lowest level in nearly four years.
- A weaker US Dollar is providing support for gold and silver prices, with silver gaining around 4.7% as it follows gold's upward trend.
- Geopolitical tensions and uncertainty regarding US monetary policy are adding defensive demand for gold, helping to maintain its price during pullbacks.
Gold prices just keep on running with the bulls, taking **XAU/USD all the way up to an intraday high of $4639 before taking a bit of a breather to consolidate. This latest move is a sign that investors are really starting to think that the US interest rates might fall later this year, especially after that softer than expected inflation data came in. As a result, people are rotating back into non-yielding assets like gold – because, well, they don’t get any yield!
The latest US CPI report gave a pretty clear sign that this is going to keep happening. Core inflation rose just 0.2% month on month in December, keeping the annual rate at 2.6% – that’s its lowest level in nearly four years. And the headline CPI – that actually increased 0.3% – just as forecast, and took the annual inflation rate up to 2.7%. But the bottom line is these figures are pointing to easing price pressures and not renewed inflation risk.
Weaker Dollar is Lifting Gold and Silver
Well, its looking like the US Dollar Index is heading for 99.10 and that’s giving precious metals a bit of breathing room. And, when the dollar gets softer, that lowers the cost of gold for non-US buyers – which often acts as a short-term catalyst during periods of macro uncertainty.
Silver is following gold higher, with XAG/USD trading near 91.09 and posting a gain of around 4.7%. The same macro drivers are at play here, though silver’s got a bit more volatility due to its industrial demand component.
Now, markets are really focused on US Retail Sales and Producer Price Index (PPI) data. If there’s any upside surprise in inflation or consumption, that could give the dollar a bit of a boost – for the time being. But if the numbers come in softer, that would likely just reinforce the current metals bid.
Geopolitics are Adding a Defensive Bid
Its worth noting though that, looking beyond macro data, geopolitical risks are still pretty elevated. Ongoing tensions with Iran and renewed uncertainty about US political pressure on the Federal Reserve are all adding a layer of defensive demand to the mix – and while not the main reason for the current gold price, these risks are all keeping a bit of a floor under the price during any pullbacks.
Gold Technical Outlook: Trend Structure Looks Healthy
From a technical perspective, gold is still looking pretty healthy on the 2-hour chart. Trading near $4635 and holding firmly above rising channel support. And, the price is still respecting that ascending trendline from late December, with recent candlesticks showing higher lows and small bullish bodies – which is a sign of steady demand rather than just speculation.
- Resistance is around $4640, which is where the upper channel boundary holds.
- Immediate support is just below that at $4589 and then a stronger base at around $4550.
- Looking at that Fibonacci retracement I found, the price is still holding above the 38.2% level.
- RSI is near 65 and is still bullish but just below overbought territory
- No triangle breakdown or bearish reversal signals to see at the moment.
Trade idea: Buy near $4590, stop below $4550, target $4660.
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