US CPI was surprisingly soft in November and that was reflected in a stock market recovery and weakness in US dollar. Normally, this sort of a move in the dollar would have been gold-positive. Not this time. Well, not immediately anyway as the metal fell back, before bouncing off its lows, to turn positive again. The near-term gold forecast remains positive as it closing in on its October record, now just a spitting distance away. But in 2026, conditions might not be as favourable for gold as it was in 2025. This is something I will write more on in my upcoming 2026 gold outlook article. For now, let’s discuss what the CPI miss means for gold, US dollar and interest rates.
Analysis: US CPI weakness is mixed news for gold – here’s why
It is worth remembering that part of the reasons why gold has been rising so sharply over these years has been due to high levels of inflation eroding the value of fiat currencies. Well, now that inflation is evidently falling faster than expected, this kind of reduces the appeal of buying insurance for inflation. Gold has been a major inflation hedge, so its weakness makes some sense in the aftermath of the CPI report. But talk of a peak in gold prices is premature.
With an annual headline rate of just 2.7%, this leaves the door open for earlier 2026 rate cuts from the Fed. That should keep the dollar undermined but whether it will also mean limited gold downside remains to be seen.
After all, there will be some scepticism about this particular inflation report given what the government shutdown meant for data collation. So, markets may be better off not to overreact to one month’s worth of data and await the December report, due in January.
But it is nonetheless clear that the impact of tariffs on inflation has turned out to be a lot milder than many had expected. With the calendar effect and recent drop in oil prices, weaker wage and job growth all to take into account, inflation could remain subdued in 2026. All that means is simple: potentially more rate cuts in 2026.
Gold forecast: XAU/USD Technical analysis
The path of least resistance is to the upside for gold, and a bullish breakout should not come as a shock to anyway. After all, gold has been defying gravity all year. I will be interested in seeing a double top or a false breakout scenario. Still, for as long as those higher highs and higher lows hold, the gold forecast will remain positive from a technical standpoint. All the key levels are on the gold chart shown above.
-- Written by Fawad Razaqzada, Market Analyst
Follow Fawad on Twitter @Trader_F_R
