Gold Slumps Despite Soft US CPI: What's Driving the Dip?

Gold trades weak despite weak US CPI data. It hit an intraday low of $3213  and is currently trading around $3215.

US consumer inflation was a bit tighter in April 2025 as the Consumer Price Index (CPI) rose 0.2% on a month-to-month basis after falling 0.1% in March, missing forecasts. Monthly inflation dropped back to a 2.3% level last seen in February 2021 from a 2.4% increase in March as declining food prices reversed increases in shelter and energy prices; shelter contributed more than half of the monthly rise, and energy rose 0.7% and food declined 0.1%. Core CPI, which does not include food and energy, also rose 0.2% for the month and 2.8% over the last year, showing further easing of underlying inflation pressures.

Rate Hike Expectations: Market Sentiment Shifts

According to the CME Fed Watch tool, the chances of a rate pause in the June 18th, 2025 meeting have increased to 91.70% from 78.40% a week ago.

Technical Analysis: Key Levels and Trading Strategy

Gold prices are holding below short-term moving averages 34 EMA and above 55 EMA and above long-term moving averages (200 EMA) in the 4-hour chart. Immediate support is at $3167 and a break below this level will drag the yellow metal to $3136/$3100/$3000. The near-term resistance is at $3245 with potential price targets at $3265/3279/$3300/$3365/$3378/$3400/$3415/$3465/$3500.

It is good to sell on rallies around $3228-30  with a stop-loss at $3250 for a target price of $3005.