Gold experienced a sharp decline on Wednesday, suffering a post-inflation report hangover after an unexpectedly strong Consumer Price Index (CPI) reading. Traders are quickly shedding their positions in Bullion,

Gold Dips 1% After CPI Data Surprises the Market News | 02/12/2025 13:48:15 GMT Gold experienced a sharp decline on Wednesday, suffering a post-inflation report hangover after an unexpectedly strong Consumer Price Index (CPI) reading. Traders are quickly shedding their positions in Bullion, as stronger inflation data has dampened the prospects of further gains in the short-term. The $3,000 price level seems increasingly out of reach, with critical technical barriers now in focus. Following the release of the U.S. CPI data for January, which exceeded expectations in both the monthly Headline and Core inflation measures, gold's price (XAU/USD) retreated. The surprise inflation figures came just one day after Federal Reserve Chairman Jerome Powell's testimony before lawmakers on Capitol Hill. Powell, while offering little new information, stated that the current monetary policy rate is proving effective in managing market volatility and guarding against potential inflationary shocks. Adding further pressure, traders are observing growing tension between the Federal Reserve and the Department of Government Efficiency (DOGE), led by Elon Musk. DOGE has announced plans to scrutinize the Fed, alongside other government agencies. In an attempt to access U.S. Treasury data, DOGE's efforts have so far been blocked, though the scrutiny of federal actions is expected to intensify in the coming weeks. Daily Market Digest: Powell’s Position Strengthened At 15:00 GMT, Fed Chairman Jerome Powell will appear for his second day of testimony before the U.S. House Financial Services Committee. Later in the day, at 17:00 GMT, Federal Reserve Bank of Atlanta President Raphael W. Bostic will speak at the Atlanta chapter of the National Association of Corporate Directors. At 22:05 GMT, Federal Reserve Governor Christopher Waller is scheduled to present at the “A Very Stable Conference: Stablecoin Infrastructure for Real World Applications” in San Francisco, California. Meanwhile, Australia's second-largest gold miner, Evolution Mining Ltd., is forecasting further price increases in the near-term, following the company's record first-half profits spurred by gold's rally to near $3,000 per ounce. As Bloomberg reports, the company remains optimistic about the outlook for bullion prices. According to the CME FedWatch tool, there is a 95.5% probability that interest rates will remain unchanged in March, while only a slim 4.5% chance exists for a 25 basis point interest rate cut. Technical Analysis: Bearish Sentiment Looms Following its volatile session on Tuesday, gold's price action is now showing clear signs of weakness. Trading below the daily Pivot Point at $2,907, gold faces significant resistance not only from the Pivot Point itself but also from multiple technical levels. Historically, when gold opens below its daily Pivot, it is seen as a bearish signal, often indicating further downside risk in the same trading session. For Wednesday’s session, the first support level is found at $2,872, the S1 support. If the sell-off continues, the next support level is $2,846 at S2. In the event of a sharper correction, the $2,790 level (the high from October 31, 2024) may offer a more substantial floor for any declines. On the upside, gold would need to reclaim the daily Pivot Point at $2,907 for any chance of a bullish reversal. A break above this level would see the first resistance zone at $2,933. If the rally continues, the psychological $2,950 level and the R2 resistance at $2,968 would come into focus, with the $3,000 level remaining the ultimate target for any sustained upside move. In summary, despite recent volatility, gold remains in a precarious position as the market digests the latest inflation data, and a technical correction seems increasingly likely.