Prices hugged the flatline near $5,000 as traders digested the latest on inflation. Turns out, it was a soft report.
🟡 Gold Pauses at $5K Mark
Gold (XAU/USD) opened the week hugging the $5,000 line, barely budging as traders absorbed Friday’s softer-than-expected inflation print. After last week’s fireworks, the metal looked almost… calm. Almost. Spot prices floated just above the big psychological threshold, consolidating gains after a 2% Friday jump sparked by cooling price pressures in the US economy. The froth cooled, but the bullish tone stuck around. Silver (XAG/USD) joined the steady start, edging above $77 an ounce. The white’ish metal tends to amplify gold’s mood swings, so for now, this relative composure feels like a temporary truce.
📉 Soft CPI, Softer Yields
The US consumer price index rose 0.2% in January, month-on-month, under the 0.3% consensus forecast and below December’s 0.3% pace. In simple terms, inflation eased more than expected, which markets interpret as friendly for rate cuts. Traders now price in roughly 63 basis points of Federal Reserve rate cuts this year. That is shorthand for about two quarter-point reductions, with July eyed as the starting line. Gold thrives when interest rates fall because it does not pay interest. Lower rates reduce the opportunity cost of holding bullion instead of bonds, making the shiny metal relatively more attractive.
📅 Thin Trading, Big Week Ahead
US stock markets are closed Monday for Washington’s Birthday, meaning lighter liquidity and fewer cross-asset signals. Thin conditions can exaggerate moves, even when headline flows are quiet. Wednesday brings the Fed’s meeting minutes, offering insight into policymakers’ thinking. Any hint of urgency on rate cuts could reignite gold’s momentum. Friday’s GDP report is expected at 2.8%, from 4.4% previously. Slowing growth alongside cooling inflation forms the classic recipe for easing policy. For gold, that backdrop still reads constructive.