Gild prices retreat from recent highs ahead of CPI data

Gold prices have seen a recent surge, reaching a two-week high driven by a combination of factors. Geopolitical tensions, trade war fears, and anticipated rate cuts by major central banks have boosted safe-haven demand for gold. However, rising US bond yields and a stronger US Dollar have capped the precious metal’s gains, particularly ahead of the crucial US CPI report.

While the fundamental backdrop remains bullish for gold, the market is cautious ahead of the CPI data release. A higher-than-expected inflation figure could lead to less dovish monetary policy expectations from the Fed, potentially weakening gold’s appeal. Conversely, a lower-than-expected reading could strengthen gold’s position as a safe-haven asset.

Technically, gold’s recent breakout above the $2,650 resistance level is a positive sign for bulls. Momentum indicators suggest further upside potential, with the $2,720-$2,722 level acting as a key resistance zone. A decisive break above this level could propel gold towards the $2,758-$2,760 and even the $2,790 record high. However, a failure to sustain momentum could lead to a pullback towards the $2,630 support level.