Gold prices are retreating from three-week highs of $4,149 in Asian trading on Tuesday, as traders lock in profits ahead of the crucial US Consumer Price Index (CPI) report. The pullback comes amid a pause in the US Dollar’s sell-off, influenced by diplomatic developments between the US and Iran. US President Donald Trump stated, "Iran militarily is effectively over. We're just keeping it the status quo," following discussions with Qatar's prime minister. These geopolitical developments have eased inflation concerns, contributing to a sharp correction in the Greenback and supporting Gold’s recovery from yearly lows of $3,870.
The upcoming US CPI data release is a key focus for traders, as it could shape the Federal Reserve’s monetary policy decisions ahead of its December 8-9 meeting. The headline monthly CPI is expected to rise by 0.3% in October, down from 0.6% in September, while core CPI is projected to increase by 0.2%. The absence of annual inflation readings due to last year’s government shutdown makes core inflation numbers particularly important. Any upside surprise in the CPI data could reinforce expectations of another December interest rate hike, potentially lifting US Treasury yields and the USD, which would weigh on Gold.
Technically, Gold is trading at $4,115.14, holding a cautious bias as it remains below key moving averages. Immediate resistance is seen around $4,185-4,190, with deeper resistance near $4,201.62 and $4,283.11. Support levels include the 21-day SMA at $4,067.85 and the Fibonacci anchor low at $3,868.92. The 14-day Relative Strength Index suggests tentative recovery momentum, but the broader trend remains bearish.