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Source: Newsmaker.id
Gold prices remain resilient despite rising US inflationary pressures that could bolster the US dollar and limit the precious metal's upside potential. US Consumer Price Index (CPI) data for September revealed intensifying price pressures, prompting the market to re-examine the Federal Reserve's monetary policy outlook. Attention now shifts to the Producer Price Index (PPI) data, with the monthly Core PPI projected to rise to 0.3% from the previous 0.2%. These expectations place gold in an intriguing position: while fundamentals suggest potential bearish pressure, price action does not necessarily follow that trajectory immediately.
Fundamentally, higher inflation could prompt the Fed to maintain interest rates at restrictive levels for longer. This scenario could enhance the appeal of the US dollar and US government bond yields, making non-yielding assets like gold relatively less attractive. However, gold's price movements are not driven solely by inflation and the US dollar. Demand for safe-haven assets, geopolitical uncertainty, central bank gold purchases, and concerns regarding fiscal conditions can also provide price support. Furthermore, pre-release market expectations shape the magnitude of price reactions; consequently, data that aligns with forecasts does not always trigger significant follow-through movement.
Gold's resistance to falling may also reflect a temporary equilibrium between selling pressure and buying interest at specific price levels. If prices repeatedly fail to break below support zones despite a strengthening US dollar, the situation warrants close monitoring, as it could signal that selling pressure is losing momentum. Conversely, if gold forms lower highs and eventually breaks support amidst strong selling pressure, the decline could extend. Therefore, price movements require confirmation through market structure, reactions to technical levels, and developments regarding the US dollar and bond yields. Price resilience alone is insufficient to conclude that a trend reversal is underway.
The release of US PPI data serves as a potential catalyst that could determine the next direction of gold prices. If Core PPI exceeds the 0.3% forecast—driving up the US dollar and bond yields—gold could face renewed selling pressure. Conversely, if the figures fall short of expectations and dampen the outlook for a tight monetary policy, a recovery for gold could be on the cards. Should the data align with forecasts, the market will likely look for further clues from other inflation components and the reaction of financial instruments. Ultimately, gold's trajectory will be shaped not only by the inflation level itself but also by how the data alters interest rate expectations and whether fundamental pressures are truly confirmed by price action. (CP)