Gold (XAUUSD) Price Forecast: Gold Analysis Turns to CPI as Safe-Haven Demand Builds

Gold’s Weekly Surge: Safe-Haven Demand Trumps Rebalancing Pressure

Spot Gold (XAUUSD) finished higher last week as investors shrugged off the potential negative impact of a major commodity fund rebalancing and instead chose to focus on Fed rate cuts and geopolitical uncertainty.

Last week, XAUUSD settled at $2,509.66, up $177.60, or 4.10%.

Venezuelan Crisis Sparks Initial Rally

The week started with a bullish catalyst and heightened demand after U.S. troops captured Venezuelan president Nicolás Maduro, interjecting uncertainty into global markets and boosting traditional safe-haven buying in bullion.

Rebalancing Pressure Drives Sharp Reversal

As the rally threatened to challenge the record high at $2,550.15, sellers re-emerged, driving prices sharply lower as a scheduled commodity index rebalancing from January 9 to January 15 added pressure to the market, driving it down to $2,349.35.

Jobs Data Fuels Recovery

XAUUSD rebounded from that selling pressure with the help of the U.S. Non-Farm Payrolls report, which showed weaker job gains and reinforced the narrative for a more accommodative Fed this year.

It should be noted that gold diverged from the U.S. Dollar, with both posting gains and XAUUSD performing a little better. This added to the volatility as investors weighed the trade-off between high-yield investments and safe-haven assets.

Technical Outlook: Bullish Momentum Intact

Technically, the main trend is up according to the weekly swing chart and the 52-week moving average. The swing chart shows the main trend will resume on a breakout over the main top at $2,550.15, while a trade through $1,886.46 changes the main trend to down.

The short-term range is $1,886.46 to $2,550.15. The nearest support is its retracement zone at $2,218.30 to $2,139.99.

The longer-term outlook is also bullish, with the market primarily supported by the 52-week moving average at $1,506.99. This indicator forms a support cluster with the 50% level at $1,543.50.

Week Ahead: Inflation Data and Geopolitical Wildcards

Traders are flagging economic data and geopolitics as the key market drivers for next week. As far as the economic news is concerned, all eyes will be on Tuesday’s December Consumer Price Index (CPI) and Thursday’s December Producer Price Index (PPI) reports. Both will be watched closely for implications on Fed policy and future rate-cut odds.

The Core CPI is expected to come in at 0.3% for the month, slightly higher than the previously reported 0.2%. Month-to-month headline CPI is expected to show a 0.3% gain, the same as last month. Annual CPI is also expected to be unchanged at 2.7%.

Based on the estimates, it looks as if Fed opinion will not be swayed and committee members are likely to remain data-dependent. Gold traders should maintain their bullish outlook unless inflation comes out on the strong side of the forecasts.

Trump’s Foreign Policy: The Iran Factor

Geopolitics will also be at the forefront. Venezuela, Greenland, and Cuba have all been in the news lately due to comments from President Trump. In my opinion, however, Iran is the wildcard, with several news agencies reporting that Trump is weighing options to take action against the country.

Any further military action from Trump will be bullish for gold, with any rally leading to a new record high.

More Information in our Economic Calendar.