Gold Shines as Weak US CPI Fuels Inflation Concerns and Rate Pause Hopes

Gold prices hold above $2700 after weak  US CPI data. It hit an intraday high of $2708  and currently trading around $2706.62.

US CPI Data Insights

US CPI data from January 15, 2025, delivered inflationary perspectives; it moved up to 2.9% every year for December from the previous month, November, where it was recorded at 2.7%. It also moved above the predicted figure of 2.8%. On a monthly basis, it rose 0.4% against a forecast of 0.3%. The core CPI, however, removes food and energy's influence and rose to 3.2% from analysts' expectations of 3.3%. The major contributor to the rising CPI was a rise of 2.6% in energy. Gasoline prices surged 4.4%. Following this report, the US stock futures surged, and Treasury yields dropped. The mixed result is likely to see the interest rates at least unchanged in their next meeting with the Federal Reserve but might resort to cuts when inflation goes soft enough.

Increase in Rate Pause Probability

According to the CME Fed Watch tool, the chances of a rate pause have increased to 97.30% up from 93.60 % a week ago.

Technical Analysis: Support, Resistance, and Trading Strategy

Gold prices are holding above short-term moving averages 34 EMA and 55 EMA and long-term moving averages (200 EMA) in the 4-hour chart. Immediate support is at $2,670, and a break below this level will drag the yellow metal $2660/$2650/$2,630,$2600/ $2,570, $2,559, $2,536, and eventually $2,500. The near-term resistance is at $2710, with potential price targets at $2725/ $2,750-/$2775. It is good to buy on dips around $2680, with a stop-loss at $2,640 for a target price of $2,775/$2790.