Gold: Will US Dollar Weakness, Fed Pivot Hopes Push Metal Back Above $2,000?

investing.com:

On Tuesday, inflation data came in only slightly below consensus, garnering a strong response from the financial markets. This not only translated into robust gains in the stock markets but also triggered a depreciation of the U.S. dollar and a decline in Treasury bond yields.

The ripple effect was also felt in gold, which remained within the $1,900-$2,000 per ounce range. Beyond macroeconomic influences, the gold bulls found support from Central Banks, with demand notably up by 14% year-on-year, reaching 800 tons in Q3.

From a technical analysis standpoint, the focal point of resistance continues to hover around the $2,000 mark.

Analyzing this year's Consumer Price Index (CPI) data, a consistent trend emerged from March to July, with readings consistently surpassing forecasts by 0.1%, except for March, which saw a 0.2% exception.

Tuesday's data followed suit, with CPI at 3.2%, slightly edging below the market consensus of 3.3%. Core CPI also performed well, registering at 4%, better than the forecasted 4.1%.

Source: Investing.com

Unlike the March-July period, the market's reaction to the data was intense with effects spilling over to the U.S. dollar, stock indexes, bond yields, and commodities. This moment stands out as the Federal Reserve finds itself on the precipice of a critical decision.

It not only needs to determine the conclusion of the hike cycle but also must signal the possibility of a long-anticipated pivot.

The prevailing market consensus points towards the initiation of monetary easing in May of the upcoming year, and any improvement in inflation data could expedite this anticipated shift.

The gold market is keeping a keen eye on dovish signals. In a recent analysis, I indicated that a true bull market in