Gold Forecast: CPI As The Key Catalyst For The Next XAUUSD Move

John Williams, President of the Federal Reserve Bank of New York, stated that current interest rates are appropriately positioned to support sustainable job creation and economic growth while guiding inflation back to the central bank's 2% target.

His confidence stems from the belief that the Federal Reserve has gained better control over risks to its dual mandate, particularly after the Federal Open Market Committee (FOMC) projected 75 basis points of rate cuts for 2025.

Speaking on January 12 at a Council on Foreign Relations event in New York City, Williams affirmed that monetary policy is in a strong position. He is known as a key official who favors a patient approach, preferring to wait for more data before considering further interest rate reductions.

According to the median estimate from the Fed's latest economic forecast in December, policymakers anticipate only a single quarter-point rate reduction this year.

Williams Details a Stable Economic Outlook

Williams provided a specific forecast for the U.S. economy, expressing confidence in the labor market and a predictable path for inflation.

He expects the unemployment rate to hold steady this year before gradually declining over the next few years. Williams noted that key labor market indicators have returned to pre-pandemic levels, signaling a gradual and healthy normalization. "I want to stress that this has been gradual, with no signs of a sudden increase in layoffs or other quick declines," he said.

On the inflation front, Williams suggested that import tariffs implemented under the Trump administration would likely have a one-time effect on prices. He projects inflation to peak between 2.75% and 3% in the first half of the year before falling to 2.5% by year-end. He also anticipates that economic growth will continue at an above-average pace.

Despite this outlook, some policymakers have raised concerns about persistent financial strain, as inflation has remained above the Fed's 2% target for nearly five years.

A Divided Fed on the Path for Rate Cuts

The Federal Reserve is not entirely unified on its interest rate strategy. Minutes from the Fed's December meeting, released on December 30, revealed a divided committee.

The report showed that some officials who voted for a quarter-point rate cut were not fully committed, indicating they could have just as easily supported a decision to hold rates steady. "Some members who favored lowering the policy rate at this meeting mentioned that their decision was very close," the minutes stated.

The release of these minutes immediately impacted market expectations, with the probability of a rate cut at the next meeting in January dropping to approximately 15%.

Stephen Stanley, chief U.S. economist at Santander US Capital Markets, commented on the situation. He suggested that the narrow vote in favor of a rate cut highlighted the continued influence of Federal Reserve Chair Jerome Powell over the near-evenly divided committee.

Global Finance Leaders Rally to Cut Rare Earth Dependency on China

Policy Options: Price Floors, Incentives, and Market Standards

Europe Acknowledges Lag, Vows Independent Action

Structural Imperatives: Security and Sustainability

Outlook: From Dialogue to Implementation

Source: Reuters

Nikkei Hits Record on Optimism Over Global and Domestic Catalysts

Wall Street Momentum Transfers to Tokyo

Causal Link Between Election Hopes and Market Rally

Investors Downplay U.S. Fed Probe, Focus on Domestic Fundamentals

Source: Reuters

Rupee Faces Renewed Pressure Amid Tariff Uncertainty and Regional Weakness

Intervention Offers Temporary Relief, But Trend Remains Weak

Regional Context: Weakness Across Asia and U.S. Political Risk Spillover

Key Market Indicators Reflect Bearish Sentiment

Outlook: Persistent Vulnerability Amid External Shocks

Source: Reuters

The Russia-Ukraine war has reached a somber new landmark, officially surpassing the duration of the Soviet Union's fight against Nazi Germany in World War II. The conflict has now stretched beyond 1,419 days, exceeding the 1,418 days from the German invasion in June 1941 to its defeat in May 1945.

Unlike the Red Army's historic advance from the Volga River to Berlin, the current war is a grinding and tragic battle of attrition. While Russia maintains momentum on the battlefield, its progress is a slow and deadly slog. According to a report in The Times of London, Russian forces in the Donetsk region have advanced only about 30 miles from their starting positions despite prolonged combat.

The Staggering Human Cost of the Conflict

The human toll of this protracted war is immense, with estimates suggesting hundreds of thousands of casualties on both sides. Ukraine's military has been sustained by billions of dollars in weapons, training, and financial aid from NATO and other Western allies.

A recent study by the BBC's Russian service and Mediazona found that at least 160,000 Russian soldiers have been killed. However, the actual number remains uncertain; it could be significantly higher, or potentially lower, as casualty figures are often weaponized for propaganda by both sides.

Meanwhile, international observers widely believe Ukraine's casualties could be several times higher than Russia's. The conflict is effectively wiping out a generation of young men from both nations.

Ukraine's Military Swells Amid Protracted War

One of the war's most significant consequences is the transformation of Ukraine's armed forces. Analysis from The Wall Street Journal notes that when the conflict ends, Ukraine will possess a military that is larger and more battle-hardened than any of its European supporters.

This creates a long-term challenge for both Ukraine and the continent. Sustaining a force of 800,000 troops and vast amounts of equipment will be one of Kyiv's most difficult post-war tasks. To address a looming cash crunch and keep its army fighting, European Union leaders recently agreed to lend Ukraine 90 billion euros (approximately $105 billion).

Ukrainian officials continue to warn of new Russian offensives, particularly in the north near the city of Sumy. This comes as the Kremlin still legally defines the conflict as a "special military operation," a status that stops short of a full declaration of war that would require mass societal mobilization.

Geopolitical Stalemate and Lingering Tensions

Despite the devastating cost, a clear diplomatic solution remains elusive. Peace efforts by the Trump administration have not succeeded, though communication channels between Washington and Moscow are still active.

Western leaders have consistently affirmed their support for Ukraine, accusing Russia of prolonging the war. At the same time, many have been slow to acknowledge Russia's long-stated grievances regarding NATO's eastward expansion, which Moscow cites as a core driver of the conflict.

President Trump's position has appeared complex; he has hinted at understanding Russia's security concerns while also reportedly authorizing U.S. intelligence support for Ukrainian drone attacks deep inside Russian territory. As both Ukrainian President Volodymyr Zelensky and Russian leader Vladimir Putin vie for his attention, the geopolitical landscape remains tense and uncertain.

Price Stalls After Breakdown Below Key Support

Natural gas remained stalled near the trend low of $3.13 on Monday, as it traded higher for the day and inside Friday's range. Monday's high was $3.43 and the low $3.18. This shows minor support near the 78.6% Fibonacci retracement area at $3.24. Friday's close at $3.14 confirmed a breakdown from that potential support area. Although minor strength was seen on Monday, natural gas remains below the 200-day moving average, which broke last week as support, and testing support near the uptrend line at the bottom of a rising channel. A breakdown of the channel confirmed with Friday's close below the line.

Reclaim Levels Needed to Ease Downside Pressure

Before there were signs of strength from the current low that could signal further upside, the lower swing high at $3.63 would need to be reclaimed, along with the 200-day average, now at $3.55. Until then, natural gas is showing continued downward pressure that could take it to lower price levels. Potential support around a long-term uptrend is next. If it was hit today, it would be around $3.03.

Fibonacci and ABCD Targets Define Lower Support Zone

A little below the trendline is a relatively large price range starting from the 88.6% retracement level at $2.95. That retracement level is followed by a 100% projected target for a falling ABCD pattern at $2.89. It shows when the decline in the second leg down (CD) off the December peak (AB), matches the drop in the first downswing (AB), and therefore it identifies a possible pivot level.

Monthly Structure Supports Potential Long-Term Support

On the monthly chart, natural gas has two higher monthly lows that occurred near the lower price zone. October's low was at $2.89 and the higher low in September was at $2.77. So far, during the bearish correction. Potentially, this supports the likelihood of support being seen near the 88.6% level or a little lower. It is interesting to note that the previous bearish measured move from the March peak ended once price was down by 46.6%. A similar percentage decline for the current decline will end near the ABCD target. In summary, there are at least five-indicators pointing to likely support near the 88.6% price zone, in case it is approached.

Source: FX Empire