Gold price (XAU/USD) turns volatile as United States Bureau of Labor Statistics (BLS) has reported hotter-than-projected Consumer Price Index (CPI) data for December. Annual headline inflation accelerated to 3.4% against expectations of 3.2% and the former reading of 3.1%. In the same period, the core CPI that excludes volatile food and oil prices at 3.9% remained higher than expectations of 3.8% but was lower than the prior release of 4.0%. Monthly headline and core inflation grew by 0.3%. The impact of a slightly higher inflation data would be nominal on bets in favor of rate cuts from the Federal Reserve (Fed) in March.

The appeal for bullions may fade slightly as investors’ confidence over the Fed reducing interest rates in March has waned a bit after a higher inflation data. Investors have been ignoring that Fed policymakers continue to lean towards keeping a restrictive stance for a longer period, denying the likelihood of early rate cuts. Atlanta Fed Bank President Raphael Bostic and New York Fed President John Williams supported the idea of keeping interest rates higher as they said more work is needed to get inflation back to the 2% target. John Williams said it would only be appropriate to unwind the current restrictive monetary policy stance when the Fed is confident that inflation is moving toward 2% on a sustained basis. Gold price is reflecting wild movements around $2,030 after the release of the sticky inflation report. On a daily timeframe, the precious metal has been struggling to extend its recovery above the 20-day Exponential Moving Average (EMA) at $2,037. The 14-period Relative Strength Index (RSI) oscillates around 50.00, which indicates that investors await a potential trigger for further action.