Gold Price Forecast: Rangebound as Traders Deal with CPI Report

Gold Price Forecast: Gold futures are inching lower on Thursday as major investors remained on the sidelines ahead of Friday’s U.S. consumer inflation report. Uncertainty over the Omicron coronavirus variant is also weighing on trading volume.

Gold Price Forecast

Gold Price Forecast: The mixed trade in U.S. Treasurys and the U.S. Dollar is encouraging investors to square positions while they await next week’s major Fed policy decisions. At 09:19 GMT, February Comex gold futures are trading $1783.80, down $1.70 or -0.10%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $166.87, up $0.06 or +0.04%.

According to latest gold price forecast Gold traders remain focused on Friday’s U.S. Consumer Price Index (CPI) report that may influence the timeline of the Fed’s tapering of economic support before its next policy meeting on December 14-15. Reduced tapering and interest rate hikes tend to push government bond yields higher, raising the opportunity cost of holding gold, which bears no interest.

In November, gold prices rose sharply as a surge in U.S. consumer prices the month before deepened fears that high inflation is here to stay amid supply chain snarls. The Labor Department’s report also showed that in the 12 months through October the consumer price index (CPI) increased 6.2%, the largest year-on-year advance since November 1990.

Gold Price Forecast

Friday’s report is expected to show monthly CPI rose 0.7%, down from October’s 0.9% jump. Monthly Core CPI is expected to show a gain of 0.5%, down from its October 0.6% rise. The current low-volume, rangebound trade in gold suggests investor indecision and uncertainty. And who can blame them?

The headlines have been confusing. Throughout the week, the headlines have created both optimism and worry. Both point toward headline risk. This ‘virus-on, virus-off’ scenario is helping to generate the sideways trade.

This week the headlines said optimism in early data hinted the omicron variant of the new coronavirus may not be as bad as feared. Yet the U.K. announced new COVID-19 restrictions. Furthermore, there is now new talk that a fourth vaccination may be necessary. Until there is clarity over the impact of Omicron, the headlines may hold prices in a range. That is, of course, until the Fed announcements next week.

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Gold Price Forecast: Rangebound as Traders Deal with CPI Report via @marketinvestor
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