The price of gold surged to a daily high of $1996.73 but then experienced a loss of momentum following a mixed US inflation report. The US Bureau of Labor Statistics reported disinflation in the US, with annual and monthly readings showing mixed results. With the upcoming Federal Reserve monetary policy decision, traders are anticipating the Fed to hold rates, with money market futures expecting 100 basis points of rate cuts for 2024.
However, after hitting the daily high, the price of gold dropped to $1979.40, down 0.11% in response to the softer US inflation report. This drop comes in anticipation of the Fed’s upcoming decision.
The Bureau of Labor Statistics reported that while headline inflation was 3.1% year-over-year, which was below October’s 3.2%, underlying inflation remained steady at 4% in the twelve months leading up to November. Monthly readings were mixed, with the consumer price index (CPI) exceeding forecasts at 0.1%, and core CPI meeting expectations at 0.3%.
Despite the softening of the US dollar, the price of gold slumped below the $1985 mark, weighed down by a rebound in US Treasury bond yields. Traders are now preparing for the Federal Reserve’s decision and await Chairman Jerome Powell’s press conference. Despite positive inflation readings, market futures have priced in 100 basis points of rate cuts for 2024, indicating caution in the market.
From a technical perspective, the daily chart for gold shows a neutral to upward bias as long as it remains above the daily moving averages (DMAs). However, a drop in the price of gold would bring the 50-DMA at $1966.41 and the 200-DMA at $1952.74 into play. Support also lies at the 100-DMA at $1941.07. On the other hand, a bullish trend may resume if the spot price rises above the October 27 high at $2009.42.
Additional insight: The price of gold is often influenced by factors such as inflation, interest rates, and the overall state of the economy. Investors turn to gold as a safe-haven asset during times of economic uncertainty. Given the mixed inflation readings and anticipation of the Fed’s decision, traders and investors will be closely monitoring the gold market for signs of potential price shifts.
