The global gold price is at its highest level in 6 months What the Fed will do with it

 Both futures and spot contracts for the yellow metal jumped by about 2% on Tuesday to reach near six-month highs above the key level of 1,800 dollars per ounce as US consumer price data pointed to a persistent slowdown in inflation from 40-year highs.

February gold standard futures contracts on the New York Comex exchange were at 1,826.95 US dollars by 10:32 Eastern Time (15:32 GMT), an increase of 34.65 US dollars, or almost 2%. The session high of 1,836.80 dollars was the highest for gold in the comics since June 27, to record a six-month high.

The spot price of gold, which is closely followed by some traders, was at 1,814.87 dollars per ounce, up 33.44 dollars, or about 2%.

Sunil Kumar Dixit, chief technical strategist at SKCharting.com "for spot gold, at this stage, the area of 1,810 – 1,800 USD – 1,790 USD has become the current spot support zone, and the price movement is heading for the next major resistance and the target of 1,845 USD,"he said.

Gold gained about 200 dollars starting from the lows of 1,600 dollars, which it reached in early October. Over the past seven weeks, the price has fallen only in one week.

The way was paved for further recovery after the collapse of the dollar index, which has lost almost 8% of its value since October. On Tuesday alone, the index, which measures the dollar against a basket of six currencies, fell by 1.4%, the largest one-day decline since November 11.

The recent decline in the dollar came after the Labor Department announced on Tuesday that consumer prices in the United States rose by 7.1% in the 12 months to November, indicating the smallest inflationary growth in almost a year, which represents support for the Federal Reserve's plans to slow down raising interest rates after it aggressively raised them to reduce price pressures.

Economists had expected the Consumer Price Index for all urban consumers, known in short as CPI, to rise by 7.3% in the year to November after an annualized growth of 7.7% announced by the Ministry of labor for October.

"This is the smallest increase in 12 months since the period ending in December 2021,"the ministry said in a statement.

The consumer price index hit a 40-year high in June when it grew at an annual rate of 9.1%. Since that peak, it has been slowing down every month, declining by a full 2% over the past five months.

"The previous report is a surprise in the downward trend," economist Adam Patton said in a post on the forex live forum, noting the 0.5% annual decline for October. "This is not a big surprise, but it is in the same direction" and will contribute to urging the Fed to slow down in raising interest rates, Patton said.

The Fed's inflation target is only 2% per annum. In an attempt to control rising prices, the central bank has added 375 basis points to interest rates since March through six rate increases.

Before that, interest rates peaked at only 25 basis points, as the Fed reduced them to almost zero after the outbreak of the global covid-19 pandemic in 2020.

Now the Fed, which carried out four consecutive 75 basis point rate increases from June through November, is considering another 50 basis point increase in its interest rate decision on December 14.

More important is what the next rate hike for February 2023 looks like: early indicators of financial markets on Tuesday indicated a rate hike of 25 basis points. If realized, that increase would match the March increase that started a series of interest rate hikes in 2022 by the Fed.