Gold drops as USD strengthens before CPI; geopolitical risks rise

Gold prices declined 0.8% to $2,725 per ounce as the US dollar gained strength ahead of crucial CPI inflation data. The DXY index rose 0.3% to 106.20, pressuring the precious metal lower despite escalating geopolitical tensions in Eastern Europe and the Middle East. Markets are pricing in a 25 basis point Fed rate cut for December with 65% probability, though stronger-than-expected CPI data could reduce these expectations. Technical analysis shows immediate support at $2,710, with the 50-day moving average at $2,695 providing stronger backing. Resistance stands at $2,750, last week's high. Bitcoin's surge above $75,000 is also diverting some safe-haven flows from gold. Traders should monitor the CPI release closely, as a reading above the 2.3% forecast could trigger further gold selling while geopolitical developments may provide underlying support.