Gold holds steady just beneath record highs as investors look ahead to US CPI data

Gold Holds Steady as Markets Await US Inflation Data

Gold prices (XAU/USD) are largely unchanged on Tuesday, with traders adopting a cautious stance ahead of the upcoming US inflation figures set for release at 13:30 GMT. At present, XAU/USD is hovering near $4,585, consolidating just beneath Monday’s historic high of approximately $4,630.

The metal continues to benefit from persistent safe-haven demand, as ongoing geopolitical tensions and economic uncertainties keep investors on edge. Market sentiment remains fragile amid a criminal probe involving Federal Reserve Chair Jerome Powell, reigniting debates about the central bank’s autonomy.

Risk appetite has also been dampened by new geopolitical events, including US President Donald Trump’s threat to impose a 25% tariff on nations conducting business with Iran, following widespread anti-government demonstrations.

These developments come after recent US military action in Venezuela targeting President Nicolás Maduro, as well as renewed statements from Trump regarding US interests in Greenland.

Looking forward, all eyes are on the US inflation report. Analysts anticipate the Consumer Price Index (CPI) to show a 0.3% increase month-over-month and a 2.7% rise year-over-year, mirroring last month’s results. The outcome could influence expectations for Federal Reserve policy and set the tone for gold’s next move.

Key Market Drivers: Fed Independence and Policy Uncertainty

• The US Department of Justice has issued grand jury subpoenas as part of a criminal investigation into Federal Reserve Chair Jerome Powell, connected to his Senate testimony regarding the Fed’s $2.5 billion headquarters renovation. Powell has described the investigation as politically charged and reaffirmed the Fed’s commitment to making decisions based on economic data rather than political influence.
• Concerns about the Fed’s independence are mounting, as President Trump is expected to announce a possible successor for Powell later this month, with Powell’s term ending in May 2026. Many anticipate Trump will select a candidate more aligned with his policy preferences, adding to uncertainty about the future direction of US monetary policy.
• On the interest rate front, markets are currently factoring in roughly two rate cuts from the Fed this year. However, last week’s US jobs data indicated a stronger-than-expected labor market, reducing expectations for aggressive rate reductions and supporting the view that the Fed may keep rates steady at its January meeting.
• The US Supreme Court is also in focus, with an opinion day scheduled for Wednesday to address the legality of tariffs implemented during Trump’s presidency. Additionally, the court will hear arguments on January 21 regarding Trump’s effort to remove Fed Governor Lisa Cook.
• Leading investment banks, including Bank of America, JPMorgan, Goldman Sachs, Morgan Stanley, and UBS, remain optimistic about gold’s prospects. According to Reuters, they forecast gold prices to remain in the $4,500–$5,000 per ounce range through 2026, citing expected Fed rate cuts, growing debt concerns, continued central bank and ETF purchases, and ongoing geopolitical risks.

Technical Outlook: Gold Consolidates Below $4,600

After a strong rally, gold bulls are pausing, with overbought signals on both daily and 4-hour charts prompting some technical selling.

The 4-hour chart shows the RSI retreating from above 70, and bearish divergence suggests that upward momentum may be losing steam in the near term, even as the overall trend remains positive.

On the downside, initial support is found in the $4,525–$4,500 area, where the 21-period Simple Moving Average (SMA) is located. A clear drop below this level could trigger a deeper correction toward $4,400.

Conversely, if gold manages to sustain a move above $4,600 and surpass the record high near $4,630, it could open the door for further gains toward the $4,700–$4,750 range.