Gold prices have dipped below $4,700 per ounce, shedding approximately 0.5% amid a stronger dollar and geopolitical tensions in the Middle East. This decline follows a period of stagnation, with gold failing to break above the key resistance level. Today’s US CPI report is pivotal, with inflation expected to rise to 3.7% year-on-year, potentially increasing pressure on the Federal Reserve and impacting precious metals.

Despite a solid fundamental outlook for gold—driven by central bank purchases and retail demand—ETF demand has significantly dropped, with Q1 seeing a 9% year-on-year decline. The World Gold Council’s latest report indicates a mixed picture: while total gold demand rose by 2% to 1,230 tonnes, jewelry consumption fell sharply, and the supply increase was minimal compared to previous quarters, hinting at a potential deficit.

Market professionals should monitor the CPI release closely, as persistent inflation could lead to renewed interest rate hikes, further pressuring gold prices.

Source: xtb.com