On Wednesday (January 15th), in the morning session of the Asian market, spot gold fluctuated slightly lower and is currently trading at $2675.50 per ounce. Gold prices rebounded slightly on Tuesday, closing at $2677.22 per ounce. Earlier, US inflation data was slightly lower than expected, giving investors weak hope that the Federal Reserve will continue to lower interest rates in 2025, causing the US dollar to fall in response. In addition, concerns about the uncertainty of Trump's policies also provide support for gold prices, but the continued rise in US bond yields has made gold bulls hesitant.

The lower than expected increase in producer prices in the United States in December was partially offset by stable service prices due to rising commodity costs, indicating that inflation is still on a downward trend. There has been no progress in reducing inflation in the past few months.

The slowdown in producer price growth reported by the Department of Labor on Tuesday has not changed the view that the Federal Reserve will not cut interest rates again before the second half of this year, as the labor market is resilient and the incoming Trump administration may impose tariffs on imported goods, thereby fueling inflation.

Carl Weinberg, Chief US Economist at High Frequency Economics, said, "The Federal Reserve may not necessarily want to see better than expected results before easing monetary conditions on a rapidly growing economy, as tariffs and tax cuts are already on the agenda of the incoming administration

The US Bureau of Labor Statistics stated that the Producer Price Index (PPI) for final demand increased by 0.2% last month, compared to a 0.4% increase in November without correction. Economists surveyed by Reuters previously predicted that PPI would rise by 0.3%.

PPI increased by 3.3% year-on-year in December, marking the highest growth rate since February 2023, with economists expecting a 3.4% increase; The growth rate in November was 3.0%.

The significant increase in year-on-year growth reflects the lower prices last year, especially for energy products. After a 1.1% increase in 2023, the inflation rate rose by 3.3% in 2024.

Excluding food, energy, and trade, PPI rose by 0.1% for the second consecutive month. This so-called core PPI increased by 3.3% year-on-year, with a growth rate of 3.5% in November. Some economists warn against overinterpreting the relatively small month on month increase in PPI, believing that producer prices will tend to weaken in December.

The government announced last week that there was a significant increase in non farm jobs and a decrease in unemployment rate in December, which led economists to expect the Federal Reserve to keep interest rates unchanged until June.

Bank of America Securities now believes that the Federal Reserve's loose cycle has ended. Goldman Sachs expects two interest rate cuts this year, in June and December, compared to the previous estimate of three.

After a 0.7% increase last month, wholesale prices of goods rose by 0.6% in December. This is mainly due to a 3.5% increase in energy product prices, including a 9.7% surge in gasoline prices. However, after rising 2.9% in November, food prices decreased by 0.1% in December. Due to the outbreak of avian influenza, wholesale egg prices surged by 55.6% in November and then rose by another 0.5%.

Excluding the volatile food and energy sectors, commodity prices remained unchanged for the first time since March. This so-called core commodity price index rose by 0.2% in November. Service prices remained unchanged last month after a 0.3% increase in November.

According to PPI data, economists estimate that the personal consumption expenditure (PCE) price index, excluding food and energy, rose by 0.2% in December. The so-called core PCE inflation rate rose slightly by 0.1% in November. It is expected that the core PCE will increase by 2.9% year-on-year in December, after two consecutive months of increase of 2.8%.

After the release of consumer price data, these predictions may change. The core PCE price index is one of the measurement indicators tracked by the Federal Reserve's monetary policy.

Matthew Martin, a senior American economist at Oxford Economics, said, "The risk is a decrease in the number of interest rate cuts... but we expect that continued progress in inflation may still make it possible for the Federal Reserve to cut interest rates at its March meeting

Jim Wyckoff, senior market analyst at Kitco Metals, said: "The warming PPI data has hit the US dollar index, which is helping the bulls in the precious metals market. Lower inflation means the Federal Reserve may cut interest rates faster. "

The US dollar index fell 0.37% on Tuesday, closing at 109.18, which lowered the price of gold for overseas buyers and supported the gold price.

Traders may be reverse hedging before the release of the CPI on Wednesday, so we have seen some volatility before the release, which has put some pressure on the US dollar, "said Helen Given, Deputy Head of Trading at Monex USA. The tariff incident seems to be the main driving force behind Tuesday's price trend

Investors are currently waiting for Wednesday's Consumer Price Index (CPI) to analyze the Federal Reserve's policy path. A Reuters survey predicts that CPI will rise by 0.3% month on month in December, with a year-on-year growth rate of 2.9%, compared to 2.7% in November.

Brad Bechtel, Global Head of Foreign Exchange at Jefferies, reminds that while the CPI report is important, "all eyes are on Trump and the new administration.

However, StoneX's head of market research, Matt Weller, stated that Wednesday's CPI data "will ultimately be more important for the Federal Reserve and traders, who will look for corresponding signs of cooling as reasons to buy risky assets.

According to data compiled by the London Stock Exchange Group (LSEG), traders currently expect the Federal Reserve to cut interest rates by 29.4 basis points before the end of the year.

US President elect Trump will return to the White House on January 20th, having previously vowed to impose trade tariffs. Analysts predict that this will trigger a trade war and reignite inflation.

US President elect Trump announced on Tuesday that he will establish a new department called the External Revenue Service, "responsible for collecting tariffs, import taxes, and all taxes from abroad. Before taking office next week, Trump is preparing to impose new import tariffs.

Trump wrote on social media that he will set up the department on the day of his second term of office on January 20, and that Americans have been taxed by their own Internal Revenue Service for too long.

UBS pointed out that the strengthening of the US dollar and the rise in the yield of US treasury bond bonds may still be the adverse factors facing gold in the first half of this year, but the demand for gold as a diversified investment tool will be enough to cover these adverse factors.

The yield of US 10-year treasury bond bonds continued to rise on Tuesday, hitting a 14 month high of 4.820%. This rate of return is considered a risk-free rate of return, and the opportunity cost of holding gold in the market. An increase in this rate of return will reduce the attractiveness of gold.

In terms of geopolitical situation, after the marathon talks held in Qatar, negotiators are trying to reach an agreement on the final details of the ceasefire in Gaza, with mediators and warring parties stating that they are closer than ever to reaching an agreement. However, after more than eight hours of talks, a senior Hamas official told Reuters reporters late Tuesday that the organization is still waiting for Israel to submit a map of its withdrawal from Gaza. US President Biden and the special envoy of President elect Trump attended the talks together. Investors need to pay attention to relevant news.

In addition, New York Federal Reserve Chairman Williams and Gago Federal Reserve Chairman Gusborne will deliver speeches on the trading day, and investors need to focus on them. In addition, pay attention to the Beige Book of the Federal Reserve's economic conditions.