Gold prices extended their rally on Wednesday, driven by expectations of an upcoming Federal Reserve (Fed) rate cut. Spot gold (XAU/USD) rose 0.40 per centto USD 2,711, as the US Consumer Price Index (CPI) data signalled potential monetary easing in the December 17-18 Fed meeting.

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In India, gold prices climbed, with 10 grams of 24-carat gold priced at Rs 79,653 in Delhi, reflecting an increase of Rs 870. The 22-carat gold price rose by Rs 800, standing at Rs 73,033 per 10 grams. Silver, however, saw a decline, with the current price at Rs 98,500 per kilogram, down by Rs 1,200.

Inflation data fuels rate cut speculation

The US Bureau of Labor Statistics reported a 0.3 per cent month-over-month increase in CPI for November, aligning with market expectations. Year-over-year, CPI rose by 2.7 percent. Core CPI, which excludes food and energy, remained steady at 0.3 per cent.
Despite meeting forecasts, the slower pace of disinflation fueled speculation of a 25-basis-point rate cut, with the swaps market pricing a 92 per cent likelihood of this move.

Impact on treasury yields and the dollar

The 10-year US Treasury yield briefly dipped to 4.201 per cent before settling at 4.24 per cent. Meanwhile, the US Dollar Index (DXY) rose 0.29 per cent to 106.68, reflecting investor reactions to inflation data.

Gold’s Technical Outlook: Bulls in Control

Gold’s upward momentum remains intact, with analysts identifying key resistance levels at USD 2,721 and USD 2,750, and support at USD 2,685. Technical indicators like the RSI point to continued bullishness in the near term.

Global Factors and Market Focus

China’s potential gold purchases to strengthen the yuan and upcoming US Producer Price Index (PPI) data are expected to shape market dynamics further.
Gold’s continued rise underscores its appeal as a hedge against economic uncertainty, solidifying its place as a safe-haven asset amid volatile global conditions.