Gold market at risk ahead of key US inflation data – London Business News | Londonlovesbusiness.com

Gold prices recorded some volatility after a two-day rally as market participants adopted a cautious approach ahead of the upcoming US consumer inflation data release.

With markets pricing in an 86% probability of a 25 basis points rate cut, the inflation figures could play a critical role in determining the Federal Reserve’s policy stance and its outlook for 2025. Higher expectations for a rate cut could support gold.

The short-term outlook for gold is also supported by anticipated rate cuts from major central banks. The European Central Bank (ECB), Swiss National Bank (SNB), and Bank of Canada (BoC) are all expected to ease policy this week, creating a generally supportive environment for the precious metal. Additionally, escalating geopolitical tensions, particularly in the Middle East continue to provide support to gold prices.

Gold’s positive sentiment is further strengthened by China’s intention to maintain a loose monetary policy stance for the year ahead and the People’s Bank of China (PBoC) resuming gold purchases after a six-month hiatus. The convergence of accommodative monetary policies, persistent economic uncertainty, and ongoing geopolitical tensions could provide a favourable backdrop for gold going forward.