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Gold price forecast: XAU/USD to prolong its climb as inflation slows

Gold prices have been on the rise in recent weeks and are now at an eight-month high. This week, gold prices climbed to $1,880 at the start of the week. The US inflation data for December will be released this Thursday, which could lend further tailwind to gold prices, according to economists at Commerzbank.

The rising price of gold is being driven by several factors, including a weaker dollar, increasing geopolitical tensions between Iran and America, and growing concerns about global economic growth due to the COVID-19 pandemic. As investors seek safe haven assets amid these uncertain times, they turn their attention towards precious metals such as gold, which has seen their value increase over time despite short-term fluctuations in pricing levels.

In addition, central banks around the world are continuing with their monetary policies of low-interest rates and quantitative easing measures that have weakened currencies while pushing up asset values like stocks or bonds, resulting in a shift towards more secure investments like gold that can provide protection against currency devaluation or market volatility when other markets may not be performing so well.

Overall, it looks like we can expect continued support for higher gold prices going forward, especially if US inflation data comes out stronger than expected later this week, providing another boost for investors looking into investing in precious metals during these turbulent times.

Gold Price
Gold Price

The inflation rate is expected to have dropped from 7.1% to 6.5%.

The US inflation data for the month of December could be a major tailwind for gold prices. The slowing of inflation that has been observed since the summer is likely to have continued last month, with market expectations pointing towards a drop from 7.1% to 6.5%. This would mark the lowest level in over 12 months, and there is already a discrepancy between what investors are expecting from the Federal Reserve’s monetary policy this year and what they are actually communicating.

This news should be welcomed by gold traders as lower rates of inflation indicate less pressure on central banks to raise interest rates, which can often put downward pressure on precious metal prices due to their lack of yield compared with other assets such as bonds or stocks that benefit more directly when borrowing costs rise higher than expected returns available elsewhere in markets like equities or government debt securities. As such, any further decline in U.S. consumer price index numbers could help support bullion values going forward into 2023 and beyond if it continues its current trajectory downward, something many analysts believe will happen given recent economic activity across America’s economy, which has seen jobless claims remain elevated despite positive vaccine news out late last year, leading some economists to project slower growth ahead after initial optimism following vaccine rollouts earlier this fall and winter season.

In conclusion, while no one can predict exactly how much impact US CPI data will have on gold prices until it’s released later today (December 18th), all signs point towards another potential boost for those investing in physical bullion or ETF products alike—especially if we see continued declines below 6.5%.