Lower US inflation supports precious metals, although speculators are profiting

Thursday’s inflation reports from the USA surprised markets with their softness. The (Consumer Price Index) (CPI) increased year-over-year by 2.7% – the lowest since July – significantly below the forecasted 3.1%. Core inflation remained at 2.6%, the lowest since March 2021, also below the expected 3.0%.

These data provided a strong argument for proponents of further interest rate cuts at the Fed. The market immediately reinterpreted the forecasts: traders are now assuming the possibility of two rate cuts in 2026, with a total reduction of about 62 basis points. This changes the landscape for defensive assets, especially precious metals.

Gold at highs but under selling pressure

Initially, gold reacted spectacularly – prices rose to the highest level in the US in the last two months, benefiting from a weaker dollar and lowered expectations for real interest rates. Silver saw a similar rebound. However, the session ended disappointingly for bulls: futures contracts for gold with delivery in February fell by $8.3 per ounce, closing at $4,334.08, while white metals lost $1.516, reaching $65.385. The cause was routine profit-taking by futures investors who were not waiting for a position to strengthen.

Dollar weakens, Fed remains in focus

The dollar index slightly declined to 98.47, supporting exposure to dollar-denominated commodities. The yield on 10-year Treasury bonds fell below 4.12% after the CPI release. However, the environment remains complex – despite dovish inflation data, the market widely expects the Fed to hold rates steady in January, with CME FedWatch indicating only a 28.8% probability of a cut this month.

An additional factor supporting safe assets is the rising tensions between the USA and Venezuela, which are fueling capital flows into safe-haven markets.

Changes in Fed leadership and altered expectations

President Trump announced that he will soon reveal the name of the new Fed chair, suggesting a preference for candidates willing to pursue aggressive rate cuts. Potential candidates – economic-political advisor Kevin Hassett, former Fed board member Kevin Warsh, or Christopher Waller – differ in their views on the pace of easing. Waller himself indicates a cautious approach, estimating the neutral rate level at 50-100 basis points below the current.

Mixed signals from the labor market

The number of new unemployment benefit claims fell to 224,000, below the forecast of 225,000. Continuing claims totaled 1.897 million – below expectations but higher than the previous reading. These data suggest the labor market remains stable, though without spectacular improvements.

Goldman Sachs forecasts: gold’s growth potential remains

Goldman Sachs analysts forecast that in 2026, gold could rise by 14% to $4,900 per ounce in the baseline scenario. Support is expected from central banks, which Goldman estimates are purchasing an average of 70 tons monthly, driven by geopolitical turmoil and risk hedging.

Despite Thursday’s decline in gold futures to $4,358 – down 0.3% – most of the morning saw gains, indicating that deeper declines could attract long-term buyers.