Gold (XAUUSD) Price Forecast: Will US CPI Trigger a Break Above $5,100?

Gold (XAUUSD) price is recovering toward $5,000 after losing over 3.5% on Thursday. This recovery shows that traders are positioning for US CPI data release. The inflation data has direct impact on expectations of Federal Reserve policy, which is still the most important factor in gold rallies.

The core annual CPI is expected to soften to 2.5% from 2.6% while the core monthly CPI is expected to increase by 0.3%. A softer annual reading supports the story of easing inflation which makes the case for Federal Reserve rate cuts and increases the demand for gold. However, if the inflation reading is higher, then it indicates presence of ongoing price pressures, which may postpone the easing of policy.

Therefore, gold traders pay close attention to whether the inflation momentum is cooling or stabilizing at higher levels because a period of high and persistent inflation restricts the flexibility of the Fed and can temporarily cap positive momentum in gold.

Despite this, there is a greater degree of market based inflation expectations over a longer timeframe. The chart below shows that the 5-year forward inflation expectation rate is currently close to 2.13%. This is lower than 2.4%-2.5% range that was seen during previous inflation scares. This data indicates that although 0.3% monthly core CPI indicates short-term price stickiness, investors still believe inflation will ease toward the Federal Reserve’s longer-term target.

If CPI data surprises to the upside in both annual and monthly readings, the market will lower the expectations for two rate cuts by the Fed this year. That shift would lead to stronger US Dollar recovery and higher real yields that would have a negative impact on the price of gold.

Gold Key Resistance at $5,100 in Focus

The daily chart below shows the strong key resistance at $5,090, as discussed previously. The price has been consolidating below this level during the past 10 days and failed to break higher. After this failure, the price dropped to $4,870 support.

However, as long as the price remains above the $4,650 support level, the next move in the gold market will likely be higher. The emergence of an ascending broadening wedge pattern indicates strong volatility. This strong volatility is likely to be resolved to the upside if the price breaks above $5,100.

Gold Short-Term Support at $4,500 Keeps Bias Bullish

The short term direction for spot gold remains bullish as long as the price holds the $4,650 support level. This support level is defined by the ascending trend line, which shows a strong bullish trend. However, a break below $4,650 will take price to $4,500 and $4,260. Overall, the price is consolidating after a sharp drop from $5,600 to $4,500.

Gold-Silver Ratio Signals Potential Upside in Precious Metals

The gold to silver ratio shows a strong breakdown in November 2025 at 78. After this breakdown, the price also broke 64 and hit 43.40. However, as spot silver (XAG) hits resistance at $120, the gold to silver ratio initiated a strong recovery back towards 64. The recovery was extended to the 72 level, but the weekly close was below 64.

This marked a sharp shadow on the weekly candle last week, which indicates weakness in the ratio. A break below 64 will take the ratio to the 30 level. This drop in the ratio will indicate further upside in gold and silver prices.

Final Words

Gold price has been consolidating around $5,000 since markets await the US CPI data. This data will clarify the direction of Federal Reserve policy. Softer inflation would help to support expectations of rate cuts. But a firmer reading could delay policy easing and cause short-term volatility in financial markets.

From technical point of view, the gold price remains structurally bullish as long as the price holds above $4,650. A decisive break above $5,100 could open the door for the next upward leg. In addition, the weakening gold to silver ratio is a sign of stronger precious metal momentum.

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