gold prices are currently stabilizing just above $2,600, following six consecutive days of decline. This marks the lowest level for the precious metal in three weeks, with traders eagerly awaiting the impending release of the US Consumer Price Index (CPI) data set for later today.
The market’s focus is squarely on the US CPI inflation figures, as expectations for an interest rate cut from the Federal Reserve in November remain strong. According to market analysis, there is an 82% likelihood that the Fed will implement a 25 basis point cut during its upcoming meeting. Despite a dovish interpretation of the Fed’s minutes from September, which suggested a preference for cuts to tackle inflation and labor market concerns, expectations surrounding the CPI data could dramatically alter sentiment.
Analysts predict that the annual CPI will rise 2.3% for September, a decrease from August’s 2.5%. Meanwhile, core CPI is anticipated to remain steady at 3.2% year-over-year. On a monthly basis, CPI inflation is expected to dip slightly to 0.1%, down from 0.2% in August, while core inflation may also ease to 0.2%, following a 0.3% increase last month. Should the CPI data show a more significant drop than anticipated, it could ignite renewed hopes for a larger rate cut, potentially leading to a rebound in gold prices. Conversely, any stronger-than-expected CPI results could diminish the chance of a rate cut, adversely affecting gold .
As traders await the crucial data release, they remain cautious about making new investments in gold . However, recent news regarding Chinese economic stimulus offers some support, including a substantial fiscal stimulus package and measures to enhance liquidity in domestic stock markets.
On the technical front, gold prices have closed below the critical 21-day Simple Moving Average recently, though there are signs that buyers are still active, with a relative strength index above 50. Immediate support is identified at the $2,600 level, and a drop below this threshold could lead prices toward the low of $2,585 seen earlier in the month. To regain upward momentum, gold must reclaim the 21-day SMA resistance at approximately $2,623, with bulls targeting the $2,650 psychological barrier and recent highs near $2,670.
