Gold (XAU/USD) remains in a consolidation phase just below the $4,600 level and close to the record high set in the previous session during Tuesday’s Asian trading hours. Market participants appear reluctant to commit to fresh positions ahead of the release of the latest US Consumer Price Index (CPI) data, which could provide clearer guidance on the Federal Reserve’s interest rate outlook. The inflation report is expected to influence near-term US Dollar (USD) movements and, in turn, set the next directional move for the non-yielding precious metal. For now, a broadly positive tone across global equity markets is limiting upside momentum in the traditional safe haven.
At the same time, ongoing concerns over the Fed’s independence continue to weigh on the USD, offering underlying support to Gold prices. Heightened geopolitical risks — including reports of a US incursion in Venezuela, President Donald Trump’s threat of military action amid unrest in Iran, the White House’s push to acquire Greenland, and the ongoing Russia–Ukraine conflict — are also underpinning demand for Gold. This backdrop suggests that the broader bias for XAU/USD remains constructive, with any near-term pullbacks likely to attract buyers. Still, mildly overbought technical conditions argue for some caution among bullish traders.
Daily digest: Gold traders await inflation data for Fed rate clues
Uncertainty surrounding the Federal Reserve intensified after reports of a criminal probe linked to Fed Chair Jerome Powell, which renewed concerns about the central bank’s independence and helped push Gold to a fresh all-time high earlier this week.
In an unusual public response, the Fed Chair indicated that the threat of criminal charges stemmed from President Trump’s frustration over the central bank’s refusal to cut interest rates despite repeated public pressure.
Geopolitical tensions added another layer of support, after Trump said he was weighing multiple options — including potential military action — in response to Iran’s crackdown on large-scale anti-government protests.
Further fueling safe-haven demand, Trump announced late Monday that any country maintaining trade relations with Iran would face a new 25% tariff on exports to the US, providing an additional tailwind for Gold prices.
Meanwhile, last Friday’s US Nonfarm Payrolls report reinforced expectations that monetary policy could remain on hold in the first quarter. Even so, markets continue to price in two interest rate cuts later this year.
This outlook has kept the US Dollar on the back foot, indirectly supporting Gold. However, traders remain cautious and are holding off on fresh bets ahead of the US inflation release.
Headline CPI is forecast to rise 0.3% month-on-month in December, with the annual rate seen unchanged at 2.7%. Core CPI, which excludes food and energy, is expected to tick up to 2.7% year-on-year.
Any meaningful deviation from expectations could reshape rate-cut probabilities for the January 28 Fed meeting, potentially triggering volatility in both the USD and Gold. From a technical perspective, XAU/USD may encounter resistance near the upper boundary of its ascending channel, around the $4,650 area.
