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Gold Eyes $2,900 as US CPI Drop Could Fuel Massive Breakout

Arslan Butt•Sunday, February 9, 2025•2 min read

Gold (XAU/USD) closed at $2,861 as the precious metal continues its steady ascent within a well-defined ascending channel. Investors remain cautious ahead of a crucial week filled with high-impact economic events that could dictate the trajectory of gold and the US dollar.

The US Consumer Price Index (CPI) data, scheduled for release on February 12, is expected to show inflation softening, which could influence the Federal Reserve’s monetary policy outlook.

Gold Price Chart
Gold Price Chart

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Gold is currently testing support at $2,852, aligning with the lower boundary of its trend channel. If buyers defend this level, gold could climb towards immediate resistance at $2,882, followed by $2,897 and $2,912.

However, a break below $2,852 could open the door for a pullback towards $2,834, with additional support at the 50-day EMA of $2,823.

Key Economic Events That Could Drive Gold Prices

This week brings a series of high-impact events that will shape market sentiment, including Fed Chair Jerome Powell’s testimony on February 11 & 12, US CPI figures on February 12, and Producer Price Index (PPI) data on February 13.

  • US CPI m/m (Feb 12): Expected at 0.3%, down from 0.4%. A lower-than-expected print may weaken the US dollar, boosting gold prices.
  • US CPI y/y (Feb 12): Forecasted at 2.9%, unchanged from the previous reading. A hotter inflation reading could increase Fed rate-hike expectations, pressuring gold.
  • US Core PPI m/m (Feb 13): Expected at 0.3%, up from 0.0%. Rising producer prices could reinforce inflation concerns, keeping gold volatile.
  • US Retail Sales (Feb 14): Expected at 0.0%, down from 0.4%. Weak retail activity could signal slowing economic momentum, supporting safe-haven demand for gold.

Dollar Index & Gold: Correlation and Market Impact

The US Dollar Index (DXY) remains in focus as traders assess inflation trends and the Fed’s stance on interest rates. If inflation data comes in below expectations, the dollar could weaken, allowing gold to extend its bullish run.

Conversely, stronger-than-expected inflation figures may reinforce the Fed’s higher-for-longer policy stance, strengthening the dollar and pressuring gold.

Markets will closely watch Powell’s testimony, which may provide further clues on the Fed’s rate outlook. If Powell signals a dovish shift, gold could break above $2,882 and target $2,912. However, a more hawkish tone could send gold lower towards $2,834 and potentially $2,807.

With key inflation data and Powell’s remarks ahead, gold remains in a consolidation phase, awaiting the next catalyst to determine its short-term direction.

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ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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