After being hit by CPI, gold surges back to 4050: Don’t mistake the rebound for a breakout

Today, Wednesday (November 11), during the Asian trading session, a sudden surge! Spot gold is now priced at 4050.75, approaching the early session high of 4052.55! The 5-minute chart shows a dramatic V-shaped reversal, with moving averages tightly entwined before the bulls made a strong upward breakout. The market is now flashing a "flat long" signal—is this a breakout rally or a bull trap washout? The struggle between bulls and bears is reaching fever pitch. With major data releases tonight, pay close attention to risk management!

[News Highlights]

On Monday, gold managed to recover $70, riding on falling oil prices and a weaker US dollar, but on Tuesday, overnight, it was slammed back to square one by US inflation data.

Spot gold closed sharply lower, down $108 or 2.61%, at $4,032 per ounce; the intraday low was near $4,013, just a whisker away from the $4,000 psychological mark. All the gains above $4,100 from the previous day were wiped out at once—this isn't just a pullback, it's a targeted detonation of gold prices by rate expectations.

The fuse was a CPI report for October that showed only a month-on-month (MoM) comparison, not year-on-year (YoY):

Overall MoM +0.4% (expected 0.3%, previous 0.6%), core MoM +0.3% (expected 0.2%), with core inflation sticking at 0.3% for three straight months. Housing, food, and services prices are broadly rising, and even lower oil prices failed to relieve core inflation pressure. Due to last year's government shutdown, there is no YoY anchor, which makes the narrative that "inflation hasn't cooled" sound even harsher in the market.

Before the data release, some Federal Reserve officials had already unveiled hawkish guidance: if core MoM stays at 0.3% or higher, a 50-basis-point rate hike should be considered in December; a mere 25-basis-point hike would hurt policy credibility. Another regional Fed president echoed this, stating that at least two more rate hikes are needed to curb inflation, and the pace may even accelerate this winter. Once the data dropped, these viewpoints shifted from "marginal discussion" to "risks that must be priced in."

The market instantly repriced: the probability of a 25-basis-point rate hike in December was nearly fully priced in, leaping to over 90%; the probability of a 50-basis-point hike jumped from zero to roughly 10%. The US Dollar Index surged almost 0.7% to 102.36; the 10-year US Treasury yield jumped 12 basis points, breaking above the 5% level intraday, and the opportunity cost of holding non-yielding gold was repriced.

The logic shift is even more lethal than the drop: high inflation would normally boost gold, but now the market is trading on "a more hawkish Fed"—real rates and the US dollar have temporarily seized pricing power, and rate hike worries have turned gold’s anti-inflation property against it. Crude oil, which flattened out on expectations of a ceasefire, also failed to prop up gold.

Attention now turns to Thursday’s dense data flow: initial jobless claims, real estate figures, and more remarks from Federal Reserve officials. All of these will help decide—will $4,000 serve as a solid floor for now, or is it just the next technical stop for stop-losses?

[Latest Gold Technical Analysis]

Affected by current fundamentals, gold prices have fallen to a four-day low of $4,015, with bears now targeting the critical $4,000 psychological mark and attempting to push gold lower. The Relative Strength Index (RSI) shows downward market momentum, suggesting further downside is possible.

On the downside, gold needs to break below $4,000 to confirm continued bearishness, which could then test the November 4 low at $3,919, or even the October 30 yearly low at $3,870. On the upside, if bulls reclaim the $4,050 level, the next target will be $4,100; a further breakout would open up more room for a rebound, with key resistance at the 50-day and 100-day Simple Moving Average (SMA) convergence zone (around $4,185–$4,200).