After a historic nine-week rally that propelled bullion to new records, gold prices are finally losing momentum. Spot gold fell around 0.4% to $4,109.55 per ounce on Friday, positioning the metal for its first weekly decline in 10 weeks as investors turned cautious ahead of critical U.S. inflation data.

Dollar Strength and Risk Sentiment Pressure Bullion

The recent pullback follows an exceptional run in which gold surged to all-time highs near $4,380 per ounce earlier this month, driven by expectations of Federal Reserve rate cuts and robust safe-haven demand amid geopolitical uncertainty.
However, as the U.S. dollar index strengthened and global risk sentiment improved, investors began unwinding bullish positions, prompting a wave of profit-taking.

Analysts note that part of the correction reflects a normalization phase after an overextended rally. “The gold market has been pricing in aggressive easing expectations for months. Now, with investors awaiting hard data, we’re seeing some tactical de-risking,” said one commodities strategist quoted by Reuters.

CPI Data in Focus: Inflation to Steer Next Fed Move

All eyes now turn to the U.S. Consumer Price Index (CPI) for September — a crucial indicator that could determine whether the Fed maintains its current stance or accelerates policy easing. Economists expect annual inflation to come in near 3.1%, slightly below August’s 3.2%.
A softer reading could reinforce expectations of a December rate cut, traditionally positive for non-yielding assets like gold. Conversely, hotter-than-expected inflation might strengthen the dollar and Treasury yields, weighing further on bullion.

“The CPI print will likely dictate short-term price action,” said a senior analyst at Investing.com. “If inflation cools as anticipated, gold could quickly reclaim lost ground. But a surprise to the upside could trigger another correction below $4,000.”

Broader Market Implications

The shift in gold’s trajectory comes as part of a broader recalibration across commodities. Silver, platinum, and palladium have also retreated this week, reflecting fading safe-haven flows and stronger greenback momentum. For investors, this underscores how swiftly sentiment can pivot in response to data-driven monetary expectations.

In both U.S. and Israeli markets, the moderation in gold underscores an evolving macro narrative: investors are balancing between inflation uncertainty, geopolitical tensions, and the timing of rate cuts. That interplay continues to define capital flows across commodities and currencies alike.

What Lies Ahead

With gold still up over 18% year-to-date, the current pause is seen more as a consolidation than a reversal. Much will depend on upcoming inflation data, the Fed’s messaging, and broader geopolitical developments that could renew safe-haven demand.

For now, the bullion market is taking a breather — a momentary exhale after months of relentless ascent. Whether the metal’s next move is another leg higher or a deeper correction will hinge on one number: U.S. inflation.