XAU/USD: Gold Logs Third Day of Gains as Traders Get Defensive Ahead of Inflation Data
Less than 1 min read
Key points:
- Gold prices spike to two-week high
- Israel hits key stockpiles in Syria
- Goldman maintains $3,000 target
Today’s CPI figures may lead to a muted response in gold prices if expectations meet reality. But if inflation misses estimates, gold may get volatile.
- Gold prices
XAUUSD shot up to a two-week high of $2,700 per ounce early Wednesday morning as traders rushed to the precious metal ahead of US inflation data and escalating tensions in the Middle East. On the one hand, gold rose ahead of today’s CPI report, which is expected to show price pressures heated up to 2.7% in November, climbing for another month following October’s 2.6% clip. - If inflation meets the target set by analysts, the Federal Reserve might feel more confident in moving forward with its plan to cut interest rates next week. Central bankers meet up on December 17-18 for the final rate decision of the year and Wall Street is hoping to see at least a 25-basis-point reduction to borrowing costs. Gold traders, too — bullion gets more appealing in a low-rate environment due to diminished opportunity cost.
- On the other hand, Middle East tremors were once again in the limelight. Israel said it struck lots of strategic weapon stockpiles in Syria. Escalating war tensions trigger a rush to safe-haven assets and that’s where gold shines bright. The yellow metal is perceived as the ultimate hedge against geopolitical risks. In addition, Wall Street mainstay Goldman Sachs reiterated its bullish target on gold for 2025 — an ounce could be going for $3,000 despite a stronger dollar.