Gold price stays below $2,700 as market awaits to US CPI report for fresh impetus

• Gold price witnessed good two-way price moves amid some repositioning of the US CPI report
• Bets for a less dovish Fed, rising US bond yields underpin the USD and cap the precious metal
• Geopolitical risks, trade war fears and rate-cut bets offer support to the safe-haven XAU/USD

The price of gold (XAU/USD) has garnered some interest from dip-buyers in the vicinity of the $2,675-$2,674 range, thereby halting its significant intraday decline from the peak reached earlier this Wednesday, which was the highest in over two weeks. The commodity is presently trading slightly below the $2,700 threshold, exhibiting minimal variation for the day, as traders choose to remain on the sidelines in anticipation of the forthcoming release of the US Consumer Price Index (CPI) report, scheduled for later in the North American session. The critical inflation data will inform the decision-making process of Federal Reserve (Fed) policymakers in the upcoming week and may offer significant support to the non-yielding yellow metal.

In the interim, a confluence of opposing forces is resulting in a favorable two-way price movement concerning the Gold price, accompanied by a degree of repositioning trading in anticipation of significant data risk. Anticipations regarding the Federal Reserve’s prudent approach to reducing interest rates have instigated a renewed increase in the yields of US Treasury bonds. This assists the US Dollar (UD) in preserving its gains registered over the past three days and functions as a headwind for the commodity. That said, geopolitical risks, along with trade war concerns, continue to offer some support to the safe-haven XAU/USD and warrant caution for bearish traders.

The price of gold is affected by a confluence of opposing factors; the potential for favorable movement appears to remain robust.
Israel initiated airstrikes against military installations throughout Syria and, for the first time in half a century, deployed ground forces beyond a demilitarized buffer zone subsequent to the recent disintegration of President Bashar al-Assad’s regime over the weekend.
President Volodymyr Zelenskyy of Ukraine has mandated an increase in financing for the procurement of new drones to equip military brigades. Additionally, he has proposed the potential deployment of foreign troops in Ukraine until the nation is able to attain membership in the NATO military alliance.

• The President-elect of the United States, Donald Trump, has committed to implementing substantial tariffs on the nation’s three principal trading partners—Mexico, Canada, and China. Additionally, he has issued a warning regarding the potential imposition of a 100% tariff on the countries collectively referred to as the ‘BRICS’ nations.
• The Bank of Canada is expected to cut rates later today, while the European Central Bank and the Swiss National Bank are likely to follow suit on Thursday, which should continue to support the non-yielding Gold price. According to the CME Group’s FedWatch Tool, the markets are presently assigning an over 85% probability to the Federal Reserve implementing a reduction in borrowing costs by 25 basis points during its policy meeting in December.
• Nevertheless, the recent hawkish statements from several prominent members of the Federal Open Market Committee (FOMC), including Fed Chair Jerome Powell, indicate that the US central bank may adopt a more prudent approach regarding the potential reduction of interest rates.
• Anticipations of a less dovish Federal Reserve contributed to an increase in US Treasury bond yields for the second consecutive day on Tuesday, while simultaneously elevating the US Dollar to a four-day peak; however, this development had minimal impact on the prevailing bullish sentiment surrounding the precious metal.
• Market attention remains fixated on the forthcoming US Consumer Price Index (CPI) report, which is expected to provide insights regarding the interest rate trajectory in the United States and potentially offer renewed momentum to the non-yielding XAU/USD.The headline The Consumer Price Index (CPI) in the United States is anticipated to experience an increase of 0.3% in November, with an annual rise projected at 2.7%. Concurrently, the core gauge, which excludes food and energy prices, is projected to remain stable at a year-over-year rate of 3.3%.

The price of gold appears to be on the verge of exceeding the $2,700 threshold and is likely to approach the supply zone ranging from $2,720 to $2,722.
From a technical perspective, this week’s breach through the $2,650-2,655 supply zone and the subsequent move up favors bullish traders. Furthermore, the oscillators on the daily chart have been exhibiting positive momentum and remain significantly distant from the overbought region. This, consequently, substantiates the favorable short-term outlook for the price of gold and reinforces the potential for the initiation of dip-buying activities in proximity to the previously mentioned resistance threshold.

This should assist in mitigating the potential decline for the XAU/USD in proximity to the $2,630 threshold, beneath which the downward trend may continue to progress towards the $2,600 psychological level.

Conversely, a sustained advance beyond the $2,700 threshold may lead to an extension towards the $2,720 to $2,722 resistance level. Subsequently, there exists a resistance level in the vicinity of $2,735. Should this resistance be surpassed, it would indicate that the recent corrective decline from the all-time high reached in October has concluded, thereby altering the sentiment in favor of bullish traders. The prevailing momentum may subsequently elevate the price of gold to the $2,758-$2,760 threshold, as it progresses towards the $2,770-$2,772 range and ultimately the $2,790 vicinity, which represents the historical apex.