Gold price slipped on Monday as investors focus on the US inflation numbers and Fed meeting set for the new week. Signs that the Fed will ease on its interest rate hikes will likely boost the precious metal past the psychologically crucial level of $1,800 an ounce.
What’s driving the market?
The new week is packed with major economic events; an aspect that is likely to heighten volatility in the gold price market. In fact, the precious metal has kicked off the week on its back foot amid a strong US dollar. Granted, it remains range-bound as investors await further cues in the form of the US CPI data on Tuesday and Fed interest rate decision on Wednesday.
Gold price may benefit from softer CPI numbers as this would heighten hopes for a less aggressive monetary policy by the Fed. Subsequently, a dovish Fed may give the bulls in the precious metals’ market an upper hand.
Analysts expect consumer prices to have risen at a slower pace of 7.3% in November compared to a similar period a year ago. Notably, the figures have been on a steady decline since June; increasing investors’ hopes that US inflation has peaked. With the decline in energy prices, core CPI is also expected to come in at 6.1% YoY compared to the prior month’s 6.3%.
With regards to the US interest rates, traders are pricing in an increase of 50 basis points. A slower pace of rate hikes could give the bulls an opportunity to push gold price past the psychologically crucial level of $1,800 an ounce. In fact, on Friday, hopes of a dovish Fed momentarily boosted the precious metal above the aforementioned level. Lower interest rates are bullish to gold price as they ease the opportunity cost of holding the non-yielding bullion.
Gold price prediction
As seen on its daily chart, gold price continues to trade above the 25 and 50-day exponential moving averages despite pulling back on Monday. In the ensuing sessions, it will likely continue to hover around 1,800.
Lower CPI numbers and a rather dovish Fed will give the bulls an opportunity to hit the upper level of 1,820. On the flip side, signs that the Fed will remain hawkish for a while longer will have the bears eyeing the support levels of 1,770 and 1,750.