Gold bounces off major trendline, US inflation data incoming

Gold has found support from a major trendline and paused its short-term downtrend. 

Gold had been selling off in November amid expectations of interest rates staying elevated in the US. 

US CPI inflation data for October could impact interest rate cut expectations and Gold price. 

Gold (XAU/USD) trades just above $2,600 on Wednesday after the precious metal’s November sell-off to seven-week lows found technical support at a major trendline. Gold takes a breather as markets wait for the release of key inflation data from the US, which could impact the future trajectory of interest rates, a major driver of the non-interest-paying yellow metal. When interest rates fall, it is favorable for Gold as it makes it more attractive to investors compared to other assets. 

Whilst the US Federal Reserve (Fed) had been on course to slash interest rates because of declining inflation and concerns about a weakening labor market – and this drove Gold price to record highs – that all changed with the election of Donald Trump to the White House. Trump’s radical protectionism and “free market” economic policies are likely to drive inflation back up, according to experts, keeping interest rates high – a negative for Gold.