A surprisingly soft US inflation report has reshaped the landscape for commodity markets. The data has placed the dollar under significant pressure while simultaneously reinforcing expectations for imminent Federal Reserve rate cuts. This powerful macroeconomic shift, combined with substantial inflows into exchange-traded funds, is propelling the precious metal to the threshold of new all-time highs.
Institutional Confidence and ETF Inflows Surge
Market activity reveals a clear trend: institutional investors are building positions. The SPDR Gold Shares ETF (GLD) recorded net inflows of $73 million last week, with its total holdings climbing to a yearly high exceeding 1,052 tonnes. This stands in stark contrast to silver, where the iShares Silver Trust (SLV) faced outflows of nearly 65 tonnes despite elevated prices. Currently trading at $4,354.50, gold is testing its 52-week peak. Over a 30-day period, the metal has advanced by 7.06 percent.
Market observers are setting ambitious targets, with many seeing a path to $5,000 in the medium term. Some fund managers, citing structural re-evaluations, even consider a long-term move toward $10,000 a plausible scenario.
Inflation Data Ignites the Rally
The primary catalyst originated from Washington. The US Labor Department reported the Consumer Price Index (CPI) rose by just 2.7 percent for November, well below the 3.1 percent economists had forecast. The core rate, at 2.6 percent, also fell short of expectations. This development directly undermines the US dollar and enhances the appeal of non-yielding gold.
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Federal Reserve Governor Christopher Waller indirectly validated market expectations by noting that current policy rates remain 50 to 100 basis points above a neutral level. Given the inflation trajectory, he now sees clear room for reductions. Meanwhile, the European Central Bank’s decision to maintain its deposit rate at 2.0 percent has provided stability, strengthening the euro against the dollar and offering additional support for gold priced in USD.
Industry Insiders Bet Big on the Future
The actions of prominent industry figures provide strong evidence of confidence in a sustained high-price environment. On December 18, Rob McEwen, CEO of McEwen Mining, increased his personal stake in Goliath Resources by exercising warrants worth CAD 1.2 million. Noted investor Eric Sprott is also participating in a financing round for Gold Terra Resource to fund a major drilling program slated for 2026.
These aggressive investments in exploration signal that the industry is planning for a lasting bull market. Companies like Sitka Gold are preparing record-breaking programs for the coming year, such as their planned work in the Yukon. Rather than using high prices as an exit opportunity, miners are leveraging them for expansion.
From a technical perspective, breaching the $4,354.50 level has cleared a major hurdle. If the price consolidates above this threshold in the coming sessions, trend-following algorithmic trading could provide further upward momentum.
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