Gold Price Forecast XAU/USD – Higher Ahead of Key Reports on Personal Income, Spending

Gold futures are moving higher on Thursday amid a slide in 10-year Treasury yields and a weaker U.S. Dollar. The catalyst behind today’s early weakness is yesterday’s comments from Federal Reserve Chairman Jerome Powell that smaller interest rate hikes could start in December.

At 10:52 GMT, February Comex gold futures are trading $1791.80, up $31.90 or +1.81%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $164.76, up $2.03 or +1.25%.

Powell Signals Slowdown in Pace of Rate Increases

Gold rallied late Wednesday after Powell said the central bank could scale back the pace of its interest rate hikes as soon as December, while cautioning the fight against inflation was far from over and that key questions remain unanswered, including how high rates will ultimately need to rise and for how long.

Powell, in remarks prepared for delivery at the Brookings Institution think tank in Washington, did not indicate his estimated “terminal rate,” but said it is likely to be “somewhat higher” than the 4.6% indicated by policymakers in their September projections, Reuters reported.

Treasury Yields Fall as Traders Assess Fed Policy Outlook

Treasury yields declined on Thursday as traders digested comments from Powell on the Fed’s interest rate policy plans. The slide in yields helped make non-yielding gold a more attractive asset.

Powell’s tone echoed that of other Fed speakers, who in recent weeks have emphasized to gold traders that rates would continue to rise, but in smaller increments.

Gold prices fell sharply during the period from March to November, where the central bank implemented four consecutive 75 basis point rate hikes, but has rallied more than $100 dollars since early November as traders started to price in the probability of a 50 basis point increase from its December meeting.

Ahead of Powell’s speech, the markets were pricing in about a 65% chance that the Fed would step down its interest rate increases to half of a percentage point in December. Following Powell’s speech, the probability for a half-point move rose to 77%.

Dollar Drops as Yields Fall

The U.S. dollar is down on Thursday and is rapidly approaching a major August bottom that could trigger the start of a steep decline. Falling Treasury yields are making the dollar a less-attractive investment. This, in turn, is helping to generate strong foreign demand for the dollar-denominated asset.

Short-Term Outlook

On Thursday, gold traders could be facing another volatile session as new reports could tell the markets how high interest rates and inflation are affecting consumers. This will be revealed in today personal spending and income figures for October. Traders will also get another look at inflation in the Core PCE report.

The release of ISM’s Purchasing Managers Index (PMI), which reflects whether factory activity is growing or contracting, will provide additional hints about the state of the broader U.S. economy. Last month’s figures reflected the slowest activity growth since mid-2020.

Gold prices could continue to rally if the data suggests a weakening economy because this could encourage the Fed to slow rate hikes further in the future. However, don’t be surprised if gains are pared late in the session as investors trim positions ahead of Friday’s Non-Farm Payrolls report.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – Optimism Over China’s Easing of COVID Curbs Offset by OPEC+ Uncertainty

Mixed fundamentals are helping to push U.S. West Texas Intermediate and international-benchmark Brent crude oil futures lower on Thursday. Uncertainty ahead of Sunday’s OPEC+ meeting is being blamed for the selling although losses are being limited by easing COVID restrictions in China.

At 06:49 GMT, January WTI crude oil futures are trading $80.14, down $0.41 or -0.51% and February Brent crude oil is at $86.41, down $0.56 or -0.64%. On Wednesday, the United States Oil Fund ETF (USO) settled at $70.21, up $1.87 or +2.74%.

Other potentially bullish factors are a tight U.S. supply situation and a weaker U.S. Dollar. The wildcard that traders are watching is the European sanctions on Russian oil. I think there is uncertainty over how it is going to work. This could only add to the volatility of a thinly traded market.

OPEC+ to Meet Virtually

OPEC+ is scheduled to meet virtually on Dec. 4. Earlier in the week, there were rumors that the group was considering cutting output due to expectations of lower demand and the lack of clarity over the impact of the looming Russian oil-price cap on the market.

However, traders now feel that since the meeting is being held virtually, there is very little chance of a major policy change. If they do make a surprise cut then look for a volatile spike to the upside.

China Eases Zero-COVID Strategy

Optimism over Chinese oil demand recovery was lifted on Wednesday when the cities of Guangzhou and Chongqing announced the easing of COVID curbs. This took place a day after demonstrators in southern Guangzhou clashed with police amid a string of protests against the world’s toughest coronavirus restrictions.

US Crude Stockpiles Plunge as Output Climbs to Highest Since March 2020

Crude inventories fell by 12.6 million barrels in the week to Nov. 25 to 419.1 million barrels, the Energy Information Administration said on Wednesday, compared with expectations in a Reuters poll for a 2.8 million-barrel drop.

The drop was attributed to refiners who continued to boost activity to counter low U.S. inventories headed into the winter heating season.

Short-Term Outlook

The early price action suggests uncertainty and impending volatility. Traders seem to be waiting for a catalyst. The next catalyst could be more easing of COVID curbs by China, a surprise output cut from OPEC+ or clarity over the impact of the cap on Russian oil. A steep drop by the U.S. Dollar could also be considered a bullish catalyst.

The bullish factors seem to be adding up but buyers appear to be reluctant to take an aggressive position in front of the OPEC+ decision.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAU/USD – Higher as Yields Retreat Following Less-Hawkish Remarks by Fed’s Powell

Gold futures are higher late in the session on Wednesday after Federal Reserve Chair Jerome Powell conveyed remarks pointing to smaller rate increases ahead. The comments drove Treasury yields and consequently the U.S. Dollar lower.

At 19:10 GMT, February Comex gold futures are trading $1773.50, up $9.80 or +0.56%. The SPDR Gold Shares ETF (GLD) is at $164.59, up $1.86 or +1.14%.

Powell Sees Smaller Rate Hikes Ahead

“Despite some promising developments, we have a long way to go in restoring price stability,” Powell said in remarks delivered at the Brookings Institution, noting that central bank moves take time to work their way into the system.

“Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” he added. “The time for moderating the pace of rate increases may come as soon as the December meeting.”

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Wednesday when buyers took out the previous main top at $1778.50. A trade through $1752.90 will change the main trend to down.

The main range is $1910.60 to $1632.40. The market is currently testing the lower level of its retracement zone at $1771.50 to $1804.30.

The short-term range is $1632.40 to $1806.00. Its retracement zone at $1719.20 to $1698.70 is the nearest support.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term 50% level at $1771.50 is likely to determine the direction of the February Comex gold futures contract into the close on Wednesday.

Bullish Scenario

A sustained move over $1771.50 will indicate the presence of buyers. If this creates enough upside momentum then look for a late session surge into the resistance cluster at $1804.30 – $1806.00.

Bearish Scenario

A sustained move under $1771.50 will signal the presence of sellers. This could trigger a retest of the main bottom at $1752.90. A trade through this level will change the main trend to down.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAU/USD – Powell’s Comments Likely to Set Near-Term Tone

Gold futures are edging higher on Wednesday but still rangebound for the week as investors monitor the movement in U.S. Treasury yields and the U.S. Dollar ahead of a key speech by Federal Reserve Chair Jerome Powell later this afternoon. Investors are hoping for further insights into the U.S. central bank’s monetary policy path.

Earlier in the week, gains were capped by hawkish comments from a pair of Federal Reserve members. Both said they favor raising the Fed’s benchmark rate to roughly 5% or more and keeping it at its peak through next year – longer than many on Wall Street had expected.

At 07:54 GMT, February Comex gold futures are trading $1768.60, up $4.90 or +0.28%. On Tuesday, the SPDR Gold Shares ETF (GLD) settled at $162.74, up $0.81 or +0.50%.

Bullard Sees Fed Remaining Aggressive

St. Louis Federal Reserve President James Bullard on Monday suggested that the financial markets are underestimating the likelihood the Fed will have to be more aggressive in its fight against inflation.

In an interview with Marketwatch, Bullard suggested that the speed of the Fed’s rate hikes isn’t as important as the ultimate level of its benchmark rate, which he said could exceed the 5% level that financial markets have priced in.

The central bank, he added, will likely have to keep its benchmark rate above 5% throughout 2023 and into 2024. He also reiterated his view that the Fed should be prepared to raise that rate to the “lower end” of a range between 5% and 7%.

Fed’s Williams Sees Need for Somewhat Higher Path for Interest Rates

New York Federal Reserve President John Williams suggested that there are some positive signs that inflation is easing, but he has an issue with the job market remaining stronger than he expected.

“That argues that we’ll need to have a somewhat higher path for interest rates” than the Fed projected in September, Williams said. At that time, the officials forecast that their benchmark rate would reach a range of 4.5% to 4.75% by early next year.

Short-Term Outlook

The price action in the gold market over the last week suggests investors are waiting for the next catalyst to drive the price action. This follows a rally into a multi-month high that was fueled by speculation the Fed will lower its December rate hike from 75 basis points to 50 basis points.

That catalyst could be Federal Reserve Chair Jerome Powell who is scheduled to deliver a speech at a Brookings institution event, scheduled for 18:30 GMT. His comments will be evaluated for any new clues on the Fed’s plans for rate hikes next year.

The ADP National Employment report at 13:15 GMT will also be watched closely, but Powell’s remarks are likely to be the main market driver.

If Powell maintains his hawkish stance, yields and the U.S. Dollar will rise, putting pressure on gold prices. If Powell wavers from his usual hawkish demeanor, gold prices could breakout over $1778.50 with $1804.30 – $1806.00 the next objective.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAU/USD – Traders Shrug Off Hawkish Fed Comments; Focus on Drop in China COVID Cases

Gold futures are up sharply on Tuesday as a surprise break in the U.S. Dollar against a basket of major currencies ignited a quick reversal to the upside in bullion. The intraday rebound may have been fueled by the news that COVID-19 cases in China dropped for the first time in a week.

The price action suggests China’s COVID news is offsetting pressure from hawkish remarks by U.S. Federal Reserve officials on interest rate hikes that triggered Monday’s sell-off.

At 10:29 GMT, February Comex gold futures are trading $1769.60, up $14.30 or +0.81%. On Monday, the SPDR Gold Shares ETF (GLD) settled at $161.95, down $1.27 or -0.78%.

Gold Turns Higher as China Records Drop in New Daily COVID Cases

Gold prices reversed early weakness on Tuesday after China reported a decline in new COVID-19 infections for Nov. 28. The country said local infections, mostly asymptomatic, totaled 38,421, down from a record high of 40,052 reported for Sunday, according to CNBC calculations of Wind Information data.

The last time the daily case count fell from the prior day was on November 19, the data showed.

Additionally, there was no indication of new protests on Monday. Over the weekend, students and groups of people across China held public demonstrations to protest the country’s stringent zero-COVID policy.

Fed Officials Reiterate Their Stance on Further Rate hikes

The greenback reversed weakness on Monday and gold prices retreated in response to hawkish comments from St. Louis Fed President James Bullard and New York Fed President John Williams.

Bullard said that the Fed needs to raise interest rates quite a bit further, while Williams said the U.S. central bank needs to press forward with rate rises but did not say how fast it will need to boost short-term borrowing costs.

Short-Term Outlook

Today’s price action suggests gold investors are putting more weight in the drop in new COVID cases in China and the news that the protests may be over than in the hawkish comments from the Fed officials.

After digesting the Fed’s Bullard and Williams comments, traders may have concluded that they didn’t really offer anything new. Both had been hawkish before, but last week’s Fed minutes made it clear that policymakers were leaning toward trimming future rate hikes to 50 basis points.

Later today at 14:00 GMT, traders will get the opportunity to react to two reports that should show the impact on the Fed rate hikes on the housing market.

At 15:00 GMT, US Consumer Confidence is expected to dip from 102.5 to 100.0.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAU/USD – Closes Lower after Hawkish Fed Officials Drive Dollar Higher

Gold futures closed lower on Monday in a volatile session that saw the market hit a more than one-week high before posting a dramatic reversal to the downside. A wicked two-sided trade in the U.S. Dollar was primarily responsible for gold’s wild price swings. Those moves were manipulated by impulsive action in the U.S. Treasury bond market.

On Monday, February Comex gold futures settled at $1755.30, down $13.50 or -0.76%. The SPDR Gold Shares ETF (GLD) finished at $161.95, down $1.27 or -0.78%.

The U.S. Dollar turned positive after falling to a near two-week low earlier in the session. A stronger greenback tends to make dollar denominated gold more expensive to foreign buyers.

The dollar was driven higher after Fed Presidents James Bullard and John Williams stated that there was a long way to go to fight inflation, with Bullard stating that rates should be held high “throughout next year and into 2024.”

Gold tends to be highly sensitive to rising U.S. interest rates as they increase the opportunity cost of holding non-yielding bullion.

Daily February Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1778.50 will reaffirm the uptrend. A move through $1733.50 will change the main trend to down.

The long-term range is $1910.60 to $1632.40. Its retracement zone at $1771.50 to $1804.30 is resistance. It essentially stopped the rally at $1806.00 on November 15 and at $1778.50 on Monday.

The minor range is $1733.50 to $1778.50. The market tested its pivot at $1756.00 on Monday.

The short-term range is $1632.40 to $1806.00. If the main trend changes to down then its retracement zone at $1719.20 – $1698.70 will become the primary downside target area.

Daily Swing Chart Technical Forecast

Trader reaction to the pivot at $1756.00 is likely to determine the direction of the February Comex gold futures contract early Tuesday.

Bullish Scenario

A sustained move over $1756.00 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into $1771.50. Sellers could come in on the first test of this level, but overcoming it could lead to a test of $1778.50.

The minor top at $1778.50 is a potential trigger point for an acceleration into the resistance cluster at $1804.30 – $1806.00.

Bearish Scenario

A sustained move under $1756.00 will signal the presence of sellers. This could trigger a steep break into the main bottom at $1733.50.

If $1733.50 fails then the main trend will change to down with $1719.20 to $1698.70 the next key target area.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAU/USD – Higher on Lower Yields as Investors Seek Clarity on Fed’s Rate-Hike Path

Gold futures are spiking to the upside on Monday after shrugging off earlier weakness. The catalysts behind the rally is a drop in Treasury yields and a weaker U.S. Dollar.

Volatility is the theme today as investors return from last week’s extended U.S. Thanksgiving holiday. Early in the session, gold was pressured by a stronger dollar, which rose in response to safe-haven demand that was fueled by protests in China against the government’s anti-COVID policies.

However, gold rallied as the dollar fell from its intraday high as expectations of a slower pace of Federal Reserve interest rate hikes starting in December, offset worries over the protests in China.

At 11:17 GMT, February Comex gold is trading $1775.60, up $6.80 or +0.38%. On Friday, SPDR Gold Shares ETF (GLD) settled at $163.18, up $0.10 or +0.06%.

Chinese Protests Generate Early Pressure

Gold prices slipped early Monday, as the dollar strengthened on safe-haven demand triggered by protests in several Chinese cities over the country’s strict COVID-19 restrictions.

Gold traders were tracking the U.S. Dollar’s move closely amid the increasing uncertainty from the growing unrest in China that seemed to be underpinning the greenback.

The break in the dollar and the rally in gold was spurred by investors looking at the bigger picture, which is the aggressiveness of the Fed moving forward and its plan to fight inflation with rate hikes, while avoiding recession.

Volatility Highlighted as Treasury Yields Slip on Safe-Haven Buying Ahead of Key Economic Data

Treasury yields were under pressure ahead of today’s trading session after minutes from the Fed’s November meeting released last week indicated that the central bank would continue to hike interest rates in coming months, but at a slower pace. Concerns about the speed of rate hikes dragging the U.S. economy into a recession have spread among investors.

Today’s early retreat in yields was fueled by the turmoil in China that created enough concern about the global economy slipping into recession to encourage investors to seek protection in safe-haven U.S. Treasury bonds.

After an early reaction to a stronger dollar, gold investors took notice of the drop in yields and reversed prices higher.

Short-Term Outlook

I don’t see safe-haven demand for gold in the near-term picture but I could build a case for higher prices if U.S. Treasury yields continue to retreat. Driving the direction of yields this week will be several key economic reports that will provide insights into how the U.S. economy is faring as interest rates and inflation remain high.

A series of key labor market data is due this week, including ADP’s private business payroll figures and JOLTs job openings on Wednesday, as well as non-farm payroll and unemployment data on Friday.

Gold traders will also get the opportunity to react to data on personal spending and income figures, for hints about the impact of high inflation and interest rates on consumers.

Gold is likely to strengthen if Treasury yields continue to fall, but gains could be limited if safe-haven buying drives the U.S. Dollar higher.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAU/USD – Uncertainty Over Inflation Could Create Rangebound Trade

Gold is trading lower on Friday as the U.S. Dollar strengthened as Treasury yields rose. Volume is extremely low due to Thursday’s U.S. holiday. The price action suggests investors are booking profits ahead of the weekend.

Gold futures are now trading lower for the week after expectations of less aggressive interest rate hikes from the Federal Reserve drove bullion prices sharply higher on Wednesday.

At 14:31 GMT, February Comex gold is trading $1766.50, down $3.30 or -0.19%. The SPDR Gold Shares ETF (GLD) is trading $162.93, down $0.15 or -0.09%.

Dollar Strengthens, but Headed Lower for Week

The U.S. Dollar is edging higher on Friday, but remained near a three-month low as it headed for a weekly loss, as the prospect of the Federal Reserve slowing monetary policy tightening as soon as December preoccupied investors.

Minutes from the Fed’s November meeting released earlier this week showed that a “substantial majority” of policymakers agreed it would soon be appropriate to slow the pace of interest rate rises.

Those remarks sent the dollar tumbling and gold price soaring as the Fed’s aggressive rate increases and market expectations of how high the central bank could take them has been a big driver of the currency’s 10% surge this year.

Treasury Yields Tick Higher as Investors Assess Fed Rate Policy Outlook

U.S. Treasury yields were slightly higher on Friday as investors digested the Federal Reserve’s November meeting minutes, which suggested that interest rate hikes would be slowed in the coming months.

The yield on the benchmark 10-year Treasury note was about 2 basis points higher at 3.726%. The 2-year Treasury yield was last trading at around 4.512%, up about 2 basis points.

As markets re-opened for a half-day of trading on Friday, after remaining closed for Thanksgiving on Thursday, they continued to absorb the Fed’s November meeting minutes published earlier in the week.

Short-Term Outlook

This week’s volatility suggests investors still aren’t sure about gold’s short-term direction. This is likely because they aren’t sure of the Fed’s next move at its December policy meeting. The lack of direction will probably be driven by the uncertainty surrounding the next U.S. consumer inflation report, which comes out shortly before the central bank’s mid-December meeting.

Until gold traders get some clarity on the direction of U.S. inflation, it’s going to be difficult to take a major position with any conviction.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAU/USD – Ready to Challenge Major Resistance at $1771.50 Following Dovish Fed Minutes

Gold futures are up sharply late in the session on Wednesday, reversing earlier weakness after the minutes from the U.S. Federal Reserve’s November policy meeting showed a “substantial majority” of members opting to slow down rate hikes.

At 19:30 GMT, February Comex gold futures are trading $1767.10, up $12.30 or +0.70%. The SPDR Gold Shares ETF (GLD) is at $163.05, up $0.98 or +0.60%.

Given the Fed member remarks the past two weeks, gold traders are dovishly interpreting the minutes which contained no real hawkish surprises.

The news drove Treasury yields sharply lower. Lower rates decrease the opportunity cost of holding non-yielding gold, making it a more attractive asset.

Gold was also boosted by a drop in the U.S. Dollar. A weaker dollar tends to drive up foreign demand for dollar-denominated bullion.

Daily February Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top on November 15.

A trade through $1806.00 will signal a resumption of the uptrend. A move through $1632.40 will change the main trend to down.

The short-term range is $1632.40 to $1806.00. Its retracement zone at $1719.20 to $1698.70 is support.

The main range is $1910.60 to $1632.40. Its retracement zone at $1771.50 to $1804.30 is resistance. This zone helped put in the top at $1806.00 on November 15.

Daily Swing Chart Technical Forecast

Trader reaction to $1751.60 is likely to determine the direction of the February Comex Gold futures contract into the close on Wednesday.

Bullish Scenario

A sustained move over $1751.60 will indicate the presence of buyers. The first upside target is the main 50% level at $1771.50. Overtaking this level will indicate the buying is getting stronger. If this creates enough upside momentum over the near-term then look for the rally to extend into the resistance cluster at $1804.30 – $1806.00.

Bearish Scenario

A sustained move under $1751.60 will signal the presence of sellers. If this generates enough downside momentum then look for a test of the intraday low at $1733.50.

Taking out $1733.50 will indicate the selling pressure is getting stronger. This could trigger a further break into the short-term 50% level at $1719.20, followed by the 61.8% level at $1698.70.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAU/USD – Fed Minutes to Set the Tone

Gold futures are drifting lower on Wednesday with most of the major players sitting on the sidelines ahead of the release of the minutes from the Federal Reserve’s November meeting at 19:00 GMT. Traders are hoping the data provides clues as to the Fed’s tightening path.

At 11:33 GMT, February Comex gold is trading $1753.40, down $1.40 or -0.08%. On Tuesday, the SPDR Gold Shares ETF (GLD) settled at $162.08, up $0.20 or +0.12%.

Despite the importance of the Fed minutes, the response to the news could be subdued because of Thursday’s U.S. bank holiday. Volume is also expected to come in below average on Friday, which means we may not see the true reaction to the minutes until next week.

However, the minutes aren’t expected to reveal too many surprises since the Fed hinted at the possibility of a pivot from its aggressive rate hike policy in its last monetary policy statement.

Since the last Fed policy meeting on November 1-2, gold is trading higher. This month’s more than $100 rally has been fueled by the October consumer inflation report that showed price pressures rose less than expected.

Fed Minutes Expectations

The Fed minutes are expected to reaffirm the recent comments of several Fed officials who said inflation is too high and interest rates are going to continue to rise until it comes down to the central bank’s mandated 2%. The major questions that investors hope the minutes provide the answer to is how high will interest rates go and how long will the Fed hold rates at that level?

Kansas City Fed President Esther George said on Tuesday the Fed may need to raise interest rates to a higher level and hold them there for longer to rein in high inflation.

Meanwhile, St. Louis Federal Reserve President James Bullard said last week the Fed’s target policy needs to rise to at least a range between 5.00% and 5.25% from the current level of just below 4.00% to be “sufficiently restrictive” to curb inflation.

Daily Forecast

Gold has been driven most of the year by the directions of Treasury yields and the U.S. Dollar and Federal Reserve policy has been the catalyst behind those moves. So it goes without saying that investors will be pouring over today’s minutes that could deliver the likely trajectory of the Fed’s rate curve over coming months.

Investors are also hoping the Fed comments on the chances of a global recession. For example, if the global economy continues to struggle, it’s unlikely the Fed will be able to tighten its monetary policy anywhere near as much as the markets are pricing. This should be supportive for gold prices.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAU/USD – Fed’s Hawkish Tone Weighs on Prices for Fifth Straight Session

Gold futures are lower for a fifth straight session since hitting two-month high on Nov. 15 at $1791.80. Bullion is being pressured by firm Treasury yields and a surge in the U.S. Dollar against a basket of major currencies.

Essentially, it’s the hawkish tone of several Fed officials that is moving all three markets. Last week was a busy one for Fed speakers with over a dozen Fed policymakers offering their latest views on the economy, jobs, inflation and current policy settings.

Most policymakers delivered the clearly hawkish message – inflation has not meaningfully softened, more work is needed, and interest rates will stay higher for longer.

At 12:00 GMT, February Comex gold is trading $1755.90, down $13.10 or -0.74%. On Friday, the SPDR Gold Shares ETF settled at $162.79, down $1.13 or -0.69%.

Major Shift in Sentiment Encouraging Long Liquidation

Gold prices are up nearly $100 in November with the rally starting after the U.S. government reported an unexpected increase in the unemployment rate. This news was bullish for gold because it served as a sign of a weakening labor market, one of the Fed’s key goals.

Prices continued to soar a few days later following the release of another government report that showed consumer inflation was cooling. The news led to a shift in sentiment with investors betting the Federal Reserve will end its series of 75 basis point rate hikes and downshift to a 50 basis point rate hike at its December meeting.

But the Fed speakers collectively said, “Not so fast”. They emphasized throughout last week that the Fed is going to continue to raise rates until they get inflation back to their mandated 2% level.

St. Louis Fed President James Bullard was particularly hawkish with his commentary saying, even under a “generous” analysis of monetary policy, the Federal Reserve needs to keep raising interest rates given that its tightening so far “had only limited effects on observed inflation.”

But it was his estimate of where rates should climb that rally set the selling in motion by spooking weak longs out of the market.

Bullard said the Fed’s target policy needs to rise to at least a range between 5.00% and 5.25% from the current level of just below 4.00% to be “sufficiently restrictive” to curb inflation, though he would defer to Fed Chair Jerome Powell regarding how much higher to move rates at upcoming policy meetings.

Short-Term Outlook

Gold traders are facing a holiday shortened week so we expect to see volume taper off. Nonetheless, the Fed will release the minutes from its November policy meeting on Wednesday which is expected to echo the hawkish comments from about a dozen Fed speakers last week.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAUUSD – Lower as Investors Seek More Clarity from Federal Reserve

Gold futures closed lower on Friday and for the week after hitting its highest level in three months on Wednesday. Investors started booking profits as hawkish Federal Reserve officials indicated that more interest rate hikes were in the offing.

On Friday, February Comex gold futures settled at $1769.00, down $8.80 or 0.50%. The United States Oil Fund ETF (USO) settled at $69.04, down 1.10 or -1.57%.

Fed Members Create Uncertainty, Encouraging Profit-Taking

Gold futures are up over $100 this month since bottoming the first week of November following a U.S. Non-Farm Payrolls report that showed an unexpected rise in the unemployment rate. Prices soared after a surprisingly cooler U.S. inflation report nearly cemented a 50 basis point rate hike in December, possibly bringing an end to a streak of 75 basis point rate hikes by the Fed.

Profit-takers started to come in last Wednesday as hawkish commentary from several Fed official started to heat up. The central theme from the policymakers was higher rates are coming.

While the Fed may slow the pace of rate hikes from 75 basis points to 50 basis points, they may also extend the time period for rate hikes. This means we could be looking at much higher than expected terminal rate, or the rate at which the Fed stops raising rates.

It’s the uncertainty of when the Fed will stop raising rates and how high rates will be when they do that is encouraging long speculations to book profits, driving prices lower. We’re not looking at the start of a change in trend per se, but rather a “When in doubt, get out” strategy.

Fed’s Bullard Set the Bearish Tone

Gold was testing a three month high on Wednesday when St. Louis Fed President James Bullard killed the rally with powerful hawkish remarks.

Bullard said the Fed’s target policy needs to rise to at least a range between 5.00% and 5.25% from the current level of just below 4.00% to be “sufficiently restrictive” to curb inflation, though he would defer to Fed Chair Jerome Powell regarding how much higher to move rates at upcoming policy meetings.

Short-Term Outlook

After topping out at $1791.80 last week, gold prices are now retreating with traders probably looking for a break into a value zone before re-entering on the long side. Our target zone is $1705.00 to $1684.60.

The market is still likely to be data driven so gold bulls will be looking for supportive data that confirms inflation is falling and the economy is weakening. This scenario will give the Fed more room to slow tightening.

Like the Fed members said, one piece of data will not be enough to shift the tone of their hawkish message. They want to continue to see further confirmation that inflation is falling.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast XAU/USD – Lower on Profit-Taking Ahead of Philly Fed, Housing Starts Reports

Gold futures are under pressure Thursday as U.S. Treasury yields inched higher and the U.S. Dollar recovered slightly from earlier weakness. Some say traders are reacting to U.S. economic data released on Wednesday that dampened hopes of a slowdown in the pace of future interest rate hike.

Volatility is hitting the financial markets shortly before the New York opening. Some of the volatility is being fueled by wild swings in the FedWatch Tool. Early in the session, the rate hike indicator showed an 89.5% chance of a 50 basis point rate hike by the Fed in December. Later, it dropped to 80%. It is currently at 84.4%.

At 11:56 GMT, December Comex gold futures are trading $1768.20, down $7.60 or -0.43%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $165.14, down $0.36 or -0.22%.

Release of UK Autumn Statement Rattling Markets

Gold prices dropped to their low of the session shortly after the release of a forecast calling for Britain’s economy to shrink next year. Finance minister Jeremy Hunt is currently outlining how he and Prime Minister Rishi Sunak will raise taxes and cut spending to repair the public finances, despite the grim outlook.

The new forecast is for gross domestic product to contract by 1.4% next year compared with a projection for growth of 1.8% in the previous outlook published in March by the Office for Budget Responsibility (OBR).

Hunt said the OBR judged that Britain – where high inflation is creating a cost-of-living crisis – is already in recession. It is the only Group of Seven nation yet to recover its pre-pandemic size, having previously suffered a decade a near-stagnant income growth.

Hunt had warned of more pain in his budget statement in the days leading up to Thursday’s announcement.

Gold Traders Monitoring US Economic News

Gold prices are showing signs of topping after U.S. data on Wednesday showed U.S. retail sales increased more than expected in October, renewing expectations that the improved economic data could prompt the Federal Reserve to keep hiking rates.

Gains are also being capped by hawkish Fed member comments. On Wednesday, San Francisco Fed President Mary Daly told CNBC it’s reasonable for the Fed to raise its policy rate to a 4.75%-5.25% range by early next year, and that pausing rate hikes is not part of the discussion.

Short-Term Outlook

Currently, gold traders are looking ahead to the release of key data from the manufacturing and housing sectors, which could provide further insights into the state of the U.S. economy.

Traders are awaiting the release of housing start and preliminary building permit figures for October. The sector has been impacted by rising prices of materials and higher mortgage rates.

Gold investors will therefore be looking to the fresh data for hints about how the U.S. economy is faring in light of persistent inflation and high interest rates.

Investors will also be monitoring a series of Fed speaker remarks for clues about the central bank’s policy plans.

The major concern for gold investors will be stronger-than-expected economic data. Hot data could make investors less optimistic about the Fed slowing the pace of its interest rate hikes. This could put pressure on gold prices.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast – Geopolitical Fears Capping Gains Ahead of US Retail Sales Data

Gold futures are edging higher on Wednesday as traders attempt to recover from yesterday’s news driven sell-off. The market is still being underpinned by cooling inflation in the United States, but rising geopolitical tensions are capping gains as investors seek protection in the U.S. Dollar.

Although the market is posting a modest gain early in the session, the buying is a little tentative, which could suggest overbought technical conditions. This could give some buyers an excuse to book profits after a more than $170 rally since November 3.

At 11:02 GMT, December Comex gold futures are trading $1783.60, up $6.80 or +0.38%. On Tuesday, the SPDR Gold Shares ETF (GLD) settled at $165.54, up $0.62 or +0.38%.

Underpinned by Fed Slowdown Hopes

Gold prices remain steady near a three-month peak hit on Wednesday as signs of cooling U.S. inflation boosted bets for smaller rate hikes.

The move was driven by a drop in Treasury yields after October’s producer price index figures came in less than expected, further confirming to investors that inflation may be easing.

The latest PPI figures showed wholesale prices rose 0.2% in October, less than the 0.5% increase expected by Dow Jones. Year over year, PPI rose 8% compared to an 8.4% increase in September. The data further indicated to investors that inflation is likely cooling after solid consumer inflation figures last week hinted at that.

After the report, Atlanta Fed President Raphael Bostic said on Tuesday he sees little evidence that aggressive monetary policy tightening is slowing inflation, anticipating that more hikes would be needed to get inflation down to the Fed’s 2% target.

Capped by Safe-Haven Dollar Gains

Gold futures tumbled after the PPI-driven rally as investors took profits and sought shelter in the safe-haven U.S. Dollar, following reports of a Russian-made rocket striking NATO-member Poland.

According to the latest reports, the United States and Western allies said they were investigating but could not confirm a report that the blast resulted from stray Russian missiles, while Russia’s defense ministry denied it.

Short-Term Outlook

Gold traders should brace for heightened volatility with some focused on the U.S. Dollar’s safe-haven appeal and others monitoring the movement in U.S. Treasury yields in reaction to a report on retail sales.

Gold prices could be capped or even move lower if there is an escalation in tensions between NATO and Russia. This could drive the U.S. Dollar higher.

Prices could rally if the tensions are defused and U.S. retail sales data come in cooler than expected.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast – Early Strength Indicates Specs are Betting on Tepid PPI Data

Gold futures are inching higher on Tuesday, but retreating from a three-month high as traders reacted to a mixed trade in U.S. Treasury bonds and the U.S. Dollar.

The market is being underpinned by hopes that the Federal Reserve would adopt a less aggressive approach on rate hikes going forward. However, the buying is little tentative for a couple of reasons including overbought technical factors and warnings from a few Fed members that the central bank is going to continue to raise rates until inflation is tamed.

At 09:41 GMT, December Comex gold futures are trading $1777.60, up $0.70 or +0.04%. On Monday, the SPDR Gold Shares ETF (GLD) settled at $164.94, up $0.38 or +0.23%.

Key Bullish Catalysts:  Uptick in US Unemployment Rate, Cooler CPI data

Fundamentally speaking, gold prices are up more than $160 since Nov. 3 for two reasons:  data from the non-farm payrolls report the first week of the month showed an uptick in the U.S. unemployment rate in October, and a tepid October consumer inflation report led to speculation the Federal Reserve would reduce the size of its upcoming rate hikes.

Traders are now pricing in an 89% probability of a 50-basis point rate hike at the Fed’s December meeting, with only an 11% likelihood of a 75-basis point rate rise.

Looking Ahead…

Today’s U.S. Producer Price Index (PPI) report, due to be released at 13:30 GMT is expected to show the headline number rose 0.4% in October. The Core PPI is expected to have risen by 0.3%.

Short-Term Outlook

Traders are going to be eyeing the PPI report for direction early Tuesday. It’s not the report per se that will drive the price action, but actually its impact on U.S. Treasury yields and consequently on the U.S. Dollar.

Cooler than expected PPI data will send yields and the dollar lower, making gold a more attractive asset.

If the PPI data comes in hotter than expected then look for gold buyers to take profits. This won’t change the trend to down, but it could encourage some of the weaker longs to trim their positions.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Futures (GC) Technical Analysis – Tentative Buying after Fed Member Rate Hike Warnings

Gold futures inched higher on Monday in a tentative trade as investors eyed firm U.S. Treasury yields and a steady U.S. Dollar throughout the session. Influencing the trade were comments from Fed officials indicating the central bank was not softening its fight against inflation despite last week’s tepid U.S. consumer inflation report.

At 22:00 GMT, December Comex gold futures are trading $1774.80, up $5.40 or +0.31%. The SPDR Gold Shares ETF (GLD) is at $164.94, up $0.38 or +0.23%.

Fed to Keep Raising Rates

Fed Vice Chair Lael Brainard on Monday joined Governor Christopher Waller, to indicate the Fed is ready to begin moving in smaller rate hike increments, while still emphasizing what Brainard called the central bank’s “resolve” to keep pushing rates higher as needed to battle a surge in inflation.

Despite the Fed member warnings about higher rates, Fed funds futures traders see an 89% probability of a 50 basis point increase at the central bank’s December meeting, with only an 11% likelihood of a 75 basis point rise.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the nearest main top at $1778.80 will reaffirm the uptrend.

A move through $1618.30 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time, gold is inside the window of time for a closing price reversal top.

The main range is $1824.60 to $1618.30. The market is currently trading on the strong side of its retracement zone at $1745.80 to $1721.50, making it support.

The major support is the long-term 50% level at $1709.10.

Short-Term Outlook

Trader reaction to $1774.80 is likely to determine the direction of the December Comex gold futures contract early Tuesday.

A trade through $1778.40 will signal a resumption of the uptrend. A move through $1778.80 will reaffirm the uptrend. This could trigger an acceleration to the upside with $1824.60 the next major target.

Taking out $1778.40 then turning lower for the session will put December Comex gold futures in a position to form a potentially bearish closing price reversal top. This won’t change the main trend to down, but if confirmed, it could trigger the start of a 2 to 3 day counter-trend sell-off.

For a look at all of today’s economic events, check out our economic calendar.

Trading With Silver: Different Ways To Get In On The Action

When I look at the charts for gold and silver, I see similar periods of consolidation with multiple tests of support. But even more interesting is the recent upturn in price and moving averages with some new higher highs. That makes me interested but tentatively bullish on the metals.

There are many ways to participate in this sector. There is, of course, physical metal – bullion or numismatics. I’ve always liked the idea of having some physical metal that I can put my hands on. And there are many secure storage options as well.

The metals sector has several popular ETFs – GLD, GDX, GDXJ, SLV, SILJ, etc. One approach would be to simply buy shares in one or more of these ETFs. That’s as easy as buying shares of stock. But, like owning stock, gains may be slow to come as we participate in the price action tick for tick.

Gold Daily Chart

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Silver Daily Chart

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As an options trader, I like to give myself a little room to be wrong on price and reduce my cost basis by selling option premiums. There are two basic ways to do that. I can buy shares and sell “covered calls” against those shares. Or I can sell puts, essentially committing to buy shares at the strike price in return for receiving an option premium. The profit and loss graph for selling a put is the same as for selling a covered call.

I prefer the “selling puts” strategy for its simplicity and relative ease of rolling out in time and up in strike price when there is an uptrend in the underlying shares. I don’t own any shares with this strategy. I’m just committing to buy shares at a certain price for a certain time period and getting paid to do that. So, it’s important to only sell puts for the number of shares I’m willing to own at the strike price sold.

Selling Puts

While the option selling strategies presented here can work on any stock or ETF that has options, they work best with relatively lower-priced products that are under about $25. A commodity ETF such as SLV – currently trading around $20 a share — is a good candidate. SILJ at around $10.50 a share also looks good.

If we sell puts, we may have shares “put” to us at some point and will then own the shares at the strike price we sold minus the premiums collected. Having shares put to us at a reduced cost basis is part of the plan. When we sell an out-of-the-money (OTM) put, we’re methodically nudging the statistics in our favor by “buying low” when there is a pull-back in the underlying. We can alternately think of selling a put as a standing limit order to buy shares with the limit price equal to the strike price we sold.

If we have shares “put” to us, we can then sell calls against the shares we now own. And the cost basis of the shares we purchased will have been reduced by the cumulative option premium collected by selling puts.

Trade Management

Writing puts and covered calls are relatively low-maintenance strategies that don’t have to be watched continuously. Once we write options, we do have to be patient and let time decay in the options we sold work for us.

If the options we sold expire worthless, we can sell new options for some future expiration cycle and collect more premium.

If our sold options are in-the-money (ITM) as expiration approaches, we can defer an assignment by rolling out for additional credit. In that case, we would buy back the option close to expiration and sell another one further out in time. We can usually do this for an additional credit because we are selling more time value.

Upside and Downside Risks

As with any strategy, it’s important to ask and understand “What could possibly go wrong?” before getting involved. Selling puts and writing covered calls are neutral to bullish strategies. There can be sustained down trends, price shocks, and changes in volatility that can affect strategy performance.

There’s always a tradeoff when selling options. In exchange for collecting option premium, profit is limited to the amount of premium collected plus any appreciation in shares up to the strike price in the case of covered calls. We may not have a great opportunity to sell option premium in every possible cycle.

Keeping probability in our favor and letting time decay work for us are benefits of selling a put or covered call. As option sellers, we don’t need large up moves to make a profit. We have the statistical odds in our favor and option time decay working for us. The underlying share price can go up, sideways, or even down a bit and we can still profit.

What To Learn More About Options Trading?

Every day on Options Trading Signals, we do defined risk trades that protect us from black swan events 24/7. Many may think that is what stop losses are for. Well, remember the markets are only open about 1/3 of the hours in a day. Therefore, a stop loss only protects you for 1/3 of each day. Stocks can gap up or down. With options, you are always protected because we do defined risk in a spread. We cover with multiple legs, which are always on once you own.

If you are new to trading or have been trading stock but are interested in options, you can find more information at The Technical Traders – Options Trading Signals Service. Brian, who has been trading options for almost 20 years, sends out real live trade alerts on actual trades, such as TSLA and NVDA, with real money. If ready to subscribe, click here:  TheTechnicalTraders.com.

Enjoy your day!

Brian Benson
Co-Author: Chris Vermeulen
Chief Options Strategist
TheTechnicalTraders.com

Disclaimer: This article and any information contained herein should not be considered investment advice. Technical Traders Ltd. and its staff are not registered investment advisors. Under no circumstances should any content from websites, articles, videos, seminars, books or emails from Technical Traders Ltd. or its affiliates be used or interpreted as a recommendation to buy or sell any security or commodity contract. Our advice is not tailored to the needs of any subscriber so talk with your investment advisor before making trading decisions. Invest at your own risk. I may or may not have positions in any security mentioned at any time and maybe buy sell or hold said security at any time.

Gold Price Fundamental Daily Forecast – Profit-Taking Weighs after Fed Official Stresses Rates Need to Go Higher

Gold futures are edging lower on Monday on profit-taking following a hawkish warning from a Federal Reserve official earlier in the day. Overbought technical conditions may have contributed to the move, following a steep rise of $92.80, or +5.24% last week.

At 07:54 GMT, December Comex gold futures are trading $1763.80, down $5.60 or -0.32%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $164.54, up $1.06 or +0.65%.

The catalyst behind the rally was a cooler-than-expected U.S. consumer inflation report that increased the odds of a 50 basis point rate hike in December by the Federal Reserve, while lowering the odds of a 75 basis point rate rise.

Treasury yields fell hard on the news, driving down the investment appeal of the U.S. Dollar, while increasing demand for dollar-denominated bullion.

Fed Members Warn of More Rate Hikes to Follow

In an effort to prevent a speculative nightmare in the financial markets, several Fed officials have warned that central bank policymakers are not finished raising rates and more pain is possible for the economy despite signs that inflation may have peaked earlier in the year.

The comments came as the U.S. Dollar tanked 4.34% against a basket of major currencies, the bench market S&P 500 Index soared 5.52% and gold rallied by 5.24% last week.

Fed Member Daly Remains Hawkish

San Francisco Fed President Mary Daly said on Friday she would rather err on the side of raising rates slightly too far, than not raising them high enough, and would want to keep them there long enough to bring inflation “reliably” back to 2%.

Fed Member Mester Sees Risk if the Central Bank Doesn’t Act Aggressive Enough

Federal Reserve Bank of Cleveland President Loretta Mester in a separate event on Thursday signaled that she, like Daily, also feels the main risk for the U.S. central bank it doesn’t act aggressively enough.

“Given the current level of inflation, its broad-based nature, and its persistence, I believe monetary policy will need to become more restrictive and remain restrictive for a while in order to put inflation on a sustainable downward path to 2%,” Mester said.

Fed President Harker Says Fed Should Be Data Dependent

Philadelphia Fed President Patrick Harker for his part said he believes the Fed ought to pause once rates get above 4.6%, to gauge the effects of tighter policy. “If we have to, we can always tighten further, based on the data,” he said.

Fed’s Waller Stresses Rates Need to Go Higher

Federal Reserve Governor Christopher Waller said on Sunday that the financial markets seem to have overreacted to the softer-than-expected October consumer price inflation data released last week.

“It was just one data point,” Waller said. “The market seems to have gotten way out in front over this one CPI report. Everybody should just take a deep breath, calm down. We’ve got a ways to go,” Waller said.

Short-Term Outlook

Despite last week’s strong rally, keep in mind that the first leg up from any major bottom is fueled by short-covering. Real buyers are not likely to chase prices higher when they could have bought gold nearly $100 lower a week ago.

The real buyers are likely to show up on a meaningful pullback into a value area. This zone is at $1697.00 to $1678.40.

This analysis suggests there are some risks to the downside.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Futures (GC) Technical Analysis – Light CPI Report has Bulls Eyeing $1824.60

Gold futures soared over 2.25% on Thursday to its highest level since August 23 after a government report showed U.S. inflation cooled off a bit in October, lifting optimism that the Federal Reserve would adopt a less aggressive approach to tightening policy starting in December.

The headline U.S. consumer price index (CPI) rose 0.4% last month after climbing by the same margin in September, the Labor Depart said. Economists polled by Reuters had forecast an advance of 0.6%.

Excluding volatile food and energy components, the so-called Core CPI increased 0.3% on a month-over-month basis after gaining 0.6% in September.

On Thursday, December Comex gold futures settled at $1753.70, up $40.00 or +2.28%. The SPDR Gold Shares ETF (GLD) finished at $163.48, up $4.83 or +3.04%.

Gold Lifted by Drop in Treasury Yields, Weaker US Dollar

The surprisingly weak consumer inflation report drove U.S. Treasury yields sharply lower as traders priced in an 85.4% probability of a 50 basis point rate hike in December. Gold rallied because lower yields tend to make non-yielding gold more attractive. In this case, short-sellers, looking for more aggressive rate hikes from the Fed, were forced to cover when the CPI news was released.

Lower yields also made the greenback a less-attractive investment. This drove up demand for dollar-denominated bullion.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Thursday when buyers took out a pair of swing tops at $1738.70 and $1746.40.

A trade through $1618.30 will change the main trend to down. This is highly unlikely, but the fast rally has put it in a position to form a closing price reversal top. This won’t change the main trend to down, but if confirmed, it could trigger a 2 to 3 day correction.

The main range is $1824.60 to $1618.30. The market is currently trading on the strong side of its retracement zone at $1745.80 to $1721.50, making it support.

Gold also closed on the strong side of a long-term retracement zone at $1709.10 to $1609.30, turning it into another resistance area.

Daily Swing Chart Technical Forecast

Trader reaction to the Fibonacci level at $1745.80 is likely to determine the direction of the December Comex gold futures contract early Friday.

Bullish Scenario

A sustained move over $1745.80 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the main top at $1778.80. This is a potential trigger point for an acceleration to the upside with $1824.60 the next major target.

Bearish Scenario

A sustained move under $1745.80 will signal the presence of sellers. This could trigger a pullback into a pair of 50% levels at $1721.50 and $1709.10. Since the main trend is up, buyers could come in on a test of these levels.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Fundamental Daily Forecast – Traders Cautious Ahead of CPI Report

Gold futures are inching lower shortly before the release of the U.S. consumer price inflation report at 13:30 GMT. The price action suggests the major players are sitting on the sidelines ahead of the data that may provide some clues as to whether the Federal Reserve slows down its aggressive rate hikes, or if it continues on that path for an extended period of time.

At 13:00 GMT, December Comex gold is trading $1712.60, down $1.10 or -0.06%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $158.68, down $0.77 or -0.48%.

Mixed Signals from Treasury Yields, U.S. Dollar

Gold traders are likely staying out of the market in front of the CPI report because of the mixed signals from the Treasury market and the U.S. Dollar.

Treasury yields are moving lower, which is typically a supportive signal for gold prices. However, the U.S. Dollar is edging higher, which usually puts a cap on gold prices.

Traders are hoping the divergence clears up following the release of the CPI report.

What to Expect from Today’s Consumer Inflation Report

Headline inflation is expected to come in at 0.6% for the month, generating a 7.9% annual reading. Core inflation is estimated to have risen by 0.5% in October, giving us a year-over-year reading of 6.5%.

Daily Forecast

For at least a week, gold traders seemed to be betting on lower-than-expected inflation, given the huge rally. This was backed by the CME’s FedWatch tool that was showing traders were about 56% certain the Fed would only raise rates by 50 basis points at its December meeting.

But the lack of follow-through to the upside and the recovering in the U.S. Dollar suggests the tone may be changing. Given that five out of the last six reports have produced upside surprises, it’s hard to go against the trend.

If the inflation numbers come in hotter than expected then look for gold prices to fall sharply lower with traders placing bets the Fed will have to raise rates either higher, or higher for an extended period of time.

This notion was supported by a Fed member on Wednesday. Minneapolis Fed President Neel Kashkari said it’s “entirely premature” to discuss any pivot away from the Fed’s current policy tightening, even as he appeared to endorse the possibility of adjusting the size of future rate hikes.

For a look at all of today’s economic events, check out our economic calendar.