On Monday, the price of spot gold slipped below the $2,000 level, reaching the $1,980 neighborhood as markets brace for the upcoming release of the US Consumer Price Index (CPI) inflation figures on Tuesday. This decline comes ahead of the Federal Reserve’s (Fed) last rate call of 2023, scheduled for Wednesday.
The market is closely watching the US CPI inflation figures, with expectations that Core CPI (excluding volatile food and energy prices) will increase from 0.2% to 0.3% month-on-month in November. The year-on-year figure is forecasted to slightly decrease from 3.2% to 3.1%. Persistent inflation above the Fed’s 2% target range has fueled expectations of potential rate cuts.
The Federal Reserve’s Monetary Policy Statement and Interest Rate Projections, along with the release of the Dot Plot, are scheduled for Wednesday at 19:00 GMT. Investors will scrutinize these releases for signs that the central bank is leaning towards rate cuts, which many in the market are anticipating in the first half of 2024.
Technically, gold’s decline on Monday follows a retreat from the 200-hour Simple Moving Average (SMA) observed last Friday. After breaking below the $2,000 major price level, spot gold is currently testing the $1,980 level. Despite this decline, the precious metal has seen significant gains, having rallied beyond $2,140 earlier in the week. The market is now navigating a consolidation phase around $2,030.
Notably, daily candlesticks have remained on the bullish side of the 200-day SMA since bouncing from the key moving average near $1,940 in November. The current decline sets up the possibility of a pullback to the 50-day SMA, which has confirmed a bullish crossover with the 200-day SMA. Further downside moves toward $1,960 could create a potential rebound opportunity for bulls, although market reactions to mid-week economic releases are expected to introduce volatility and impact technical setups.
