Gold (XAUUSD) failed to rebound from a multi-day low of $4,640, trending downward for the second consecutive session. Tuesday’s US Consumer Price Index (CPI) report came in hotter than expected, confirming the Federal Reserve’s (Fed) intention to stay hawkish. Alongside persistent geopolitical uncertainty, this data has bolstered the American dollar, pushing it to its highest level in more than a week yesterday, while weighing on bullion ahead of the European trading session.
So, back to inflation. On May 12, the Bureau of Labor Statistics (BLS) reported that the headline CPI jumped from March’s 3.3% to April’s 3.8% on an annual basis—nearly a three-year high. Moreover, the core reading, which excludes volatile food and energy prices, rose by 0.4% last month. The annual figure hit a seven-month record of 2.8%—far from the central bank’s target of 2%. Traders responded swiftly, estimating the probability of a Fed rate hike in 2026 at 35%.
Unfortunately, there is more to worry about. American inflation is likely to climb further, driven by elevated crude prices amid the deadlock in the US-Iran peace talks. On the flip side, this environment favors the securities market. 30-year Treasury yields temporarily surged to 5.00%, nearly touching a yearly high. 2-year bonds—more sensitive to interest rate shifts—are close to 4%. This backdrop provides solid support for the greenback and acts as a headwind for the non‑yielding precious metal.
The overall recommendation is to sell gold. Profits should be taken at $4,640. Stop Loss could be set at $4,750.
The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
