Gold price forecast: Bullion may rise further on rising inflation, breakeven rates

Gold bulls charged after hotter-than-expected CPI print and rising breakeven rates good for bullion’s longer-term outlook.

Spot Gold prices shot higher overnight as traders digested a much hotter-than-expected inflation print out of the United States. The October consumer price index (CPI) revealed the highest annual rate of inflation in over 20 years at 6.2% y/y. That was an 0.8% increase from last month’s annual reading. Analysts expected a 5.8% figure.

Traders bought up gold despite a corresponding rise in the US Dollar and Treasury yields, which typically work against XAU prices. The Treasury rout was hardly contained to the United States, with spillover effects seen across key government bond markets. The upward pressure on Treasury yields is continuing through Thursday’s Asia-Pacific session while gold prices level off.

Real yields dropped, suggesting longer-lasting inflation expectations may be metastasizing across a wider segment of market participates. The rate on the ten-year Treasury inflation-protected note hit a fresh post-pandemic low following the CPI release. That widened the spread versus the nominal yield, a measure referred to as a breakeven rate -- the market’s expectation for inflation over the next ten years.

Since gold is seen as an inflation hedge by a large segment of traders, that may have been one of the catalysts that sent prices higher. XAU bulls may believe the Fed has fallen behind the curve on inflation too, which would likely lead to the central bank having to play catchup. That leaves the door open for a period of stagflation, as policymakers would have to scramble to avoid runaway inflation and raise rates quickly.

Higher rates bode poorly for gold prices. However, the aforementioned scenario would also likely cause a rout in the stock market. Increased volatility is traditionally a tailwind for gold prices, with investors turning to the yellow metal to diversify and tame volatility-linked effects on their portfolios. This type of outlook plays out rather well for bullion.

Gold technical forecast

XAU/USD broke above key resistance overnight, with prices moderating just above the 1840 handle through APAC early trading. A resumption higher will target the psychologically imposing 1900 level, which hasn’t been traded at since June. Former trendline support could pose resistance above. A pullback would have bulls looking to defend the recently breached resistance level near 1830 – an area that acted as resistance from July to September.

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. This information Advice given in this article is general in nature and is not intended to influence any person’s decisions about investing or financial products. ​

The material on this page does not contain a record of IG’s trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Introducing our best ever web platform

Enhance your CFD trading with the new IG Trading platform:

  • Quicker deals, with one-click execution from lists

  • Real-time updates, with news and Twitter feeds

  • Orders to part close, price change alerts, a dark theme and more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.