The Gold price (XAU/USD) struggles to find significant momentum in the Asian session following a late pullback from the $2,040 area in the previous session. Currently, it trades within a narrow range as traders exhibit reluctance, opting to wait for the release of the latest consumer inflation figures scheduled for Thursday before committing to fresh directional bets.
Market participants are keenly eyeing the crucial US Consumer Price Index (CPI) report, as it holds the potential to influence expectations regarding the Federal Reserve’s future policy decisions. The outcome will likely play a pivotal role in determining the near-term trajectory for the non-yielding Gold price. The current economic landscape suggests a resilient US economy with above-target inflation, supported by hawkish remarks from Fed officials. This has led investors to adjust their expectations for aggressive policy easing in 2024, contributing to elevated US Treasury bond yields and acting as a headwind for Gold.
A positive tone in the equity markets further limits the appeal of the safe-haven Gold, while uncertainty lingers over the timing of the Fed’s interest rate cuts. Although the central bank signaled a cautious stance at its December meeting, the exact timing of potential rate cuts remains uncertain.
The absence of significant economic data releases from the US on Wednesday places the USD at the mercy of US bond yields. Additionally, broader risk sentiment may offer short-term impetus to Gold trading. Despite the defensive position of USD bulls, Gold remains within reach of a nearly three-week low witnessed on Monday.
The precious metal’s challenge in attracting buyers suggests the potential for an extension of the established downtrend observed over the past two weeks. Traders are likely to remain vigilant for short-term opportunities, with the US CPI report holding the key to setting the tone for Gold price movements in the sessions ahead.
