Yellow Metal Faces Selling Pressure Amid USD Rally Before Inflation Data

Gold struggles in Thursday’s Asian trading as the US Dollar rebounds and profit-takers cash in on recent gains. The precious metal dipped below $4,350 during early Asian hours, retreating from its seven-week highs. While near-term selling interest weighs on prices, supportive factors including Fed rate-cut expectations and escalating geopolitical tensions could cap further downside movement.

What’s Driving Gold Lower Today?

The immediate pressure stems from a combination of technical profit-taking and US Dollar strength. After rallying sharply, the yellow metal attracted sellers looking to lock in gains. Simultaneously, the stronger USD makes Gold more expensive for foreign buyers, creating additional headwinds. However, market participants note that this pullback may offer a temporary dip rather than a trend reversal, given the broader macroeconomic backdrop.

Fed’s Mixed Signals Keep Rate-Cut Bets Alive

The recent weaker US jobs report—with Nonfarm Payrolls rising just 64,000 in November compared to a 105,000 drop in October—has reinforced expectations for further Federal Reserve rate cuts. Currently, futures markets are pricing in a 31% probability of a rate cut next month, up from 22% just before the employment data release. Lower interest rates would reduce the opportunity cost of holding non-yielding assets like Gold, providing natural support for the metal.

That said, Fed Governor Christopher Waller cautioned against rushing into aggressive cuts while inflation remains elevated, and Atlanta Fed President Raphael Bostic signaled skepticism about cutting rates in 2025 unless inflation declines meaningfully. This policy divergence keeps rate-cut narratives uncertain heading into the inflation print.

Geopolitical Risk Premium in Focus

Venezuela’s decision to deploy its navy for escorting oil shipments amid US blockade threats adds another layer to the safe-haven case for Gold. Rising geopolitical tensions typically support precious metals as investors seek refuge from uncertainty. This factor could limit how far the yellow metal falls even if the US Dollar maintains its strength.

All Eyes on US CPI Data

The market’s immediate focus is on Thursday’s US Consumer Price Index release. Headline CPI is expected to climb 3.1% YoY for November, while core CPI is projected at 3.0% YoY. Weekly Initial Jobless Claims data will also be released later in the session. These figures could significantly influence USD positioning and rate-cut probability in the near term.

Technical Picture Remains Constructive

Despite the daily weakness, Gold maintains a positive long-term technical setup. The price continues to trade above the key 100-day Exponential Moving Average, and the four-hour chart shows widening Bollinger Bands with the 14-day RSI positioned above midline levels—signals suggesting upside momentum remains intact.

If buyers regain control and push prices above the upper Bollinger Band resistance at $4,352, the metal could target its all-time high near $4,381 and the psychological $4,400 level. Conversely, weakness below the December 17 low of $4,300 could see support tested at $4,271, with the 100-day EMA at $4,233 representing the deeper safety net.

The takeaway: Today’s pullback appears tactical rather than fundamental, with multiple factors—Fed easing bias, geopolitical risk, and technical strength—potentially supporting any attempted recovery.