Gold (XAU/USD) rebounded on Thursday following US inflation data that came in lower than expected. At the time, XAU/USD was trading around $4,368, rising above the week’s previous range.
The US Consumer Price Index (CPI) rose 2.7% year-on-year in November, compared to market expectations of 3.1%, easing from 3.0% in September. Core CPI also slowed to 2.6% from an anticipated 3.0%, affecting the Federal Reserve’s potential monetary policy decisions.
Anticipation Of Federal Reserve Rate Cuts
Anticipation grows for Federal Reserve rate cuts into 2026, with US rate futures pricing in 62 basis points of easing. Meanwhile, tensions between the US and Venezuela contribute to safe-haven flows, supporting Gold prices near record highs.
US labour data shows mixed signals; Initial Jobless Claims fell to 224K, slightly under estimates, while Continuing Claims rose to 1.897M, exceeding the previous 1.83M. The US Dollar Index (DXY) decreased to 98.27 after a brief high, benefiting Gold’s appeal.
President Trump is set to announce a new Federal Reserve chairman who favours lower rates. Fed Governor Waller suggests cautious easing as inflation stays above target.
Technically, XAU/USD surpassed the $4,350 resistance, aiming for the $4,381 record high. The 50-day Simple Moving Average offers dynamic support at $4,142, with overbought RSI suggesting strong momentum. The Average Directional Index (ADX) at 26.49 supports a strong market trend.
Gold, seen as a safe haven and inflation hedge, is mainly held by central banks, with record-buying occurring in 2022. It inversely correlates with the US Dollar and risky assets. Geopolitical issues and interest rates also impact Gold’s price, typically rising with lower rates and a weaker Dollar.
We’ve just seen US inflation for November 2025 come in at 2.7%, which was a significant surprise below the 3.1% the market was expecting. This strengthens our view that the Federal Reserve will have to move towards easing monetary policy next year. In fact, futures markets immediately reacted, and are now pricing in more than 60 basis points of rate cuts for 2026.
Upcoming Federal Reserve Announcement
The imminent announcement of a new Federal Reserve Chair is the biggest wildcard for the next few weeks and a major source of potential volatility. President Trump has explicitly stated he wants a leader who favors much lower interest rates, signaling a structural shift to a more dovish policy. Derivative traders should anticipate a spike in implied volatility on gold options leading into this announcement, as the market repositions for this new reality.
Technically, gold has pushed decisively above the $4,350 resistance level, opening the way to test the all-time high near $4,381. However, the Relative Strength Index is showing an overbought reading above 74, which suggests this powerful move might be due for a brief pause or a shallow pullback. We should look at any dip towards the dynamic support around the 50-day moving average, currently near $4,142, as a potential entry point for long positions.
A weaker US Dollar is providing a strong tailwind for bullion, with the Dollar Index (DXY) slipping to around 98.27. This inverse relationship has been reliable, especially during periods of Fed easing expectations like we saw through much of 2024. As long as the market believes the Fed will cut rates more aggressively than other central banks, the dollar should remain under pressure, making gold more attractive.
We also can’t ignore the support from safe-haven demand, as geopolitical tensions between the United States and Venezuela continue to simmer. This provides a solid floor for the price and cushions against any sudden corrections. Central bank buying has also remained robust, with the latest data from November 2025 showing that emerging market banks in particular continued to add to their gold reserves, a trend we expect to persist.
