The dollar held below 104 as investors processed the most recent CPI statistics, leading to increases in gold

The dollar index stayed below 104, and gold showed a slight rise, closing at 61,181, up 0.1%. Awaiting the Federal Reserve’s policy announcement on Wednesday, investors were intently examining the most recent Consumer Price Index (CPI) report. In line with market predictions, the U.S. consumer price inflation rate decreased to 3.1% in November, the lowest level in five months. At its nearly two-year low of 4%, the core rate remained stable.

In contrast to the market’s expectation of a flat reading, headline inflation increased by 0.1% on a monthly basis, while the core rate marginally increased to 0.3%. At its December meeting, the Federal Reserve is anticipated to keep interest rates at their current levels, and investors are looking forward to any clues on possible rate hikes in the upcoming year.

Contrary to market expectations, the strong labor market may force policymakers to take a less dovish posture. Indian dealers boosted discounts in the physical gold market to seven-month highs in an attempt to draw buyers in spite of record local prices that have been stifling demand. At the same time, premiums fell in China, the largest market.

In terms of technical analysis, open interest fell by -1.18% to settle at 14,739, indicating that the market is seeing short covering. A break below 60,995 might test the levels of 60,815, where gold is now finding support. Further probing of 61,765 could result with a rise above the anticipated resistance level of 61,470.

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