Gold prices edged lower as traders awaited Friday's CPI report.
2026-02-12 21:55:58
On Thursday (February 12), spot gold edged lower and the dollar strengthened in early U.S. trading as the market continued to digest yesterday's much stronger-than-expected U.S. non-farm payroll data. The significantly better-than-expected data lowered market expectations for a March rate cut by the Federal Reserve and led traders to question the possibility of a June rate cut. Consumer inflation data to be released next Friday will be a key factor in next month's interest rate decision.
A rebounding dollar is putting downward pressure on gold prices, while geopolitical risks have taken a backseat.
The dollar edged lower on Thursday, but its rebound from a one-week low in the previous session had already impacted dollar-denominated gold. Geopolitical factors have taken a backseat this week, although they continue to provide long-term support for gold prices. Gold traders are focused on US economic data this week, as it has a two-way impact on gold prices.
While long-term demand for gold is supported by central bank purchases and safe-haven demand, economic data will still influence the Federal Reserve's policy direction in the coming months, thus affecting gold prices.
The Federal Reserve shifts its focus back to inflation.
Wednesday's jobs data has already released the first two-way risk signal. In recent months, the Federal Reserve has hinted that a weakening U.S. job market is its main concern and that inflation will eventually subside. However, at the Fed meeting on January 27-28, Chairman Jerome Powell suggested that the central bank's focus has shifted back to stubborn inflation. This makes Friday's U.S. Consumer Price Index (CPI) the market's focus.
If the CPI data, like the non-farm payroll data, exceeds expectations, then yesterday's fluctuations in the US dollar and gold may seem insignificant compared to the potential market movements that follow.
Higher-than-expected CPI may delay interest rate cuts until September.
(Spot gold daily chart source: FX678)
The market currently expects the Federal Reserve to cut interest rates for the first time in June. However, if inflation data is higher than predicted, traders may postpone the first rate cut in 2026 to September, which would likely drive the dollar significantly stronger and cause gold prices to fall back to recent lows.
The Federal Reserve's policies are only one part of the long-term bull market for gold. Therefore, for long-term bulls who refer to central bank gold purchases, a short-term pullback in gold prices to the support range is actually a favorable situation.
Uncertainty surrounding the timing and frequency of Federal Reserve rate cuts this year may persist for several months until the job market aligns with inflation expectations. During this period, gold traders need to be prepared for short-term volatility and mixed market conditions.
At 21:45 Beijing time, spot gold was trading at $5,075.48 per ounce, down 0.16%.
A rebounding dollar is putting downward pressure on gold prices, while geopolitical risks have taken a backseat.
The dollar edged lower on Thursday, but its rebound from a one-week low in the previous session had already impacted dollar-denominated gold. Geopolitical factors have taken a backseat this week, although they continue to provide long-term support for gold prices. Gold traders are focused on US economic data this week, as it has a two-way impact on gold prices.
While long-term demand for gold is supported by central bank purchases and safe-haven demand, economic data will still influence the Federal Reserve's policy direction in the coming months, thus affecting gold prices.
The Federal Reserve shifts its focus back to inflation.
Wednesday's jobs data has already released the first two-way risk signal. In recent months, the Federal Reserve has hinted that a weakening U.S. job market is its main concern and that inflation will eventually subside. However, at the Fed meeting on January 27-28, Chairman Jerome Powell suggested that the central bank's focus has shifted back to stubborn inflation. This makes Friday's U.S. Consumer Price Index (CPI) the market's focus.
If the CPI data, like the non-farm payroll data, exceeds expectations, then yesterday's fluctuations in the US dollar and gold may seem insignificant compared to the potential market movements that follow.
Higher-than-expected CPI may delay interest rate cuts until September.
(Spot gold daily chart source: FX678)
The market currently expects the Federal Reserve to cut interest rates for the first time in June. However, if inflation data is higher than predicted, traders may postpone the first rate cut in 2026 to September, which would likely drive the dollar significantly stronger and cause gold prices to fall back to recent lows.
The Federal Reserve's policies are only one part of the long-term bull market for gold. Therefore, for long-term bulls who refer to central bank gold purchases, a short-term pullback in gold prices to the support range is actually a favorable situation.
Uncertainty surrounding the timing and frequency of Federal Reserve rate cuts this year may persist for several months until the job market aligns with inflation expectations. During this period, gold traders need to be prepared for short-term volatility and mixed market conditions.
At 21:45 Beijing time, spot gold was trading at $5,075.48 per ounce, down 0.16%.
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