Gold Price Forecast: US Inflation Expected to Slow, October CPI May Support Gold Breaking Above $4,200

TradingKey - As of Tuesday's Asian session (November 10), gold prices (XAUUSD) edged lower following Monday's sharp rally, falling about 0.56% intraday to trade near $4,120. Gold previously surged nearly 2% on Monday, touching an intraday high of $4,148.71. A decline in international oil prices has eased market concerns over U.S. inflation, but with the imminent release of October CPI data, investors are reassessing the likelihood of a Federal Reserve rate hike in December.

While strong labor data supports potential Federal Reserve rate hike expectations, retreating oil prices and declining Treasury yields have lent support to bullion.

The upcoming inflation data will dictate near-term direction; softer figures could drive gold toward the $4,200 resistance, whereas persistent inflation risks renewing downward pressure toward the $4,085 support zone.

Core CPI, which excludes food and energy prices, is expected to increase 0.2% month-over-month, down from 0.3% in September.

Meanwhile, the U. S. dollar and Treasury yields retreated, helping propel gold prices back above $4,100.

If both headline and core CPI come in below expectations, particularly if core CPI falls to around 0.1% month-over-month, the market may lower rate-hike probabilities, weighing on the U. S. dollar and Treasury yields and creating conditions for a further rebound in gold.

In that scenario, the U. S. dollar and Treasury yields could rebound, exerting downward pressure on gold prices.

Looking at gold's daily chart, as gold surged on Monday and closed firmly above $4,100, its short-term bullish structure has noticeably improved, further opening up upside potential, with the next target poised to test the $4,200 mark.