Gold Price Outlook: XAU/USD Firmer Despite Higher CPI

Summary:

Gold price action on the XAUUSD chart pushes higher this Thursday, despite a slight increase in the CPI and Core CPI for November.

Gold price action on the XAU/USD chart is firmer this Thursday after a double release of US data further put the greenback in a precarious position and drove bids on the yellow metal.

Consumer price inflation rose by 0.2% on a seasonally adjusted basis, up from the 0.0% figure registered for October. This translated to an annualized figure of 1.2% before seasonal adjustment. Core CPI was also up by 0.2%, after remaining unchanged in October. 0.1% had been the consensus number for both the CPI and Core CPI, heading into the news release.

The CPI data, which is typically 0.4% ahead of the preferred inflation metric used by the Fed, leaves inflation below the Fed’s targets. This means that the Fed will be under no pressure to raise rates, allowing the low-interest environment to persist (USD-negative event). This makes gold (an inflation hedge) a preferable asset to the greenback.

Technical Outlook for XAU/USD

Gold price action on the XAU/USD daily chart met resistance at 1850.78, leaving this level as the key price level to beat for buyers. An advance beyond 1850 allows gold price action to pursue the 1869.39 resistance, with 1881.99 lining up as a future target.

On the flip side, a push below 1821.55 is required to open the door towards 1800.34 and possibly 1788.90 and 1762.51.