Gold market analysis

"Rising Interest Rate Expectations Unfavorable for Gold Prices" 13/5/2026 11:04 Completed

In April, U.S. inflation rose sharply, with the overall CPI increasing from 3.3% to 3.8% year-on-year, the highest since May 2023. The core CPI rose from 2.6% to 2.8%, with energy prices surging by 17.9%, the largest increase since September 2022. The data not only dashed hopes of further interest rate cuts by the Federal Reserve this year but also raised market expectations of an interest rate hike. According to CME's FedWatch, the probability of a 25 basis point rate hike in December rose from 21.5% before the data release to 29.9%, while the probability of maintaining the federal funds rate dropped from 72.8% to 62.8%. 

Gold prices plunged sharply after the data release. Spot gold dropped from $4,708.83 to $4,638.57 before stabilizing. Although it rebounded continuously afterwards and reached as high as $4,727.09 in the early Asian market today, it fell again shortly after, with the $4,700 mark lost once more. From the hourly chart, it can be seen that gold prices have mainly fluctuated between $4,648 and $4,770 since last Tuesday. The longer the price remains at the high level, the greater the impact when a breakthrough occurs. The reaction of gold prices to the intensification of US inflation confirms one point: under the market expectation of rising interest rates, gold is not necessarily the best tool to hedge against inflation. 

Strategically, given the clear sideways trend of gold prices, short-term traders should continue to adopt a buy-on-dips approach within the range of $4,648 to $4,770. For those looking to make longer-term investments, interest rate factors must be taken into account, and these factors are clearly unfavorable for gold prices. From a daily chart perspective, the current gold price is still constrained by the 50SMA ($4,740.5) and is in a triangular formation. If the price moves downward, it is highly likely to test the previous low of $4,500 before finding support. 

The above content is for reference only and does not constitute investment advice.