CPI meets expectations but pushes up gold, what is the market betting on

The US December CPI YoY came in as expected at 2.7%, unchanged from November, fully in line with market expectations. Despite the seemingly stable data, spot gold immediately surged over $10 to $4613 per ounce after the release, and silver also rose by $0.3 to $87.04 per ounce. Behind this seemingly contradictory market reaction lies investors’ deep expectations for the macro environment in 2026.

Why CPI in line with expectations boosts precious metals

Signals of stable inflation release

CPI data meeting expectations is not news in itself; the real focus is on how the market interprets this result. According to the latest reports, Wall Street strategists generally believe that the stable December CPI reflects progress in structural inflation improvement. Falling oil prices, easing housing costs, and the fading of one-time tariff-induced price hikes collectively support a moderate inflation trend.

This confirmation of inflation stability dispels market concerns about “inflation stickiness.” When inflation is no longer out of control, the Federal Reserve has room to cut interest rates. Related information indicates that a cooling labor market further provides a basis for the Fed to lower rates within the year.

Rate cut expectations weaken the dollar

Expectations of rate cuts by the Fed directly impact the dollar. A weaker dollar is the most direct mechanism for pushing up dollar-denominated gold. When the dollar depreciates, the cost for investors priced in other currencies to buy gold decreases, demand increases accordingly, and gold prices rise in response.

This is precisely the core driver behind today’s short-term gold rally.

Safe-haven sentiment and risk appetite shift

Gold’s rise also reflects subtle changes in market risk appetite. According to reports, QCP Capital pointed out that risk assets like Bitcoin initially rose due to the dollar’s decline but later lost momentum, highlighting a waning market optimism for a breakout in Q1.

In this context, investors are beginning to reallocate into traditional safe-haven assets like gold. The rise in gold reflects both optimistic expectations for rate cuts and cautious attitudes toward subsequent risks.

Broader macro backdrop

The “fish and bear’s paw” expectation for 2026

According to the latest news, Wall Street is building an optimistic narrative for 2026: Fed rate cuts, tax incentives from Trump’s “Big and Beautiful Act,” falling inflation, and AI-driven productivity gains all work in tandem. Goldman Sachs forecasts that AI-driven productivity improvements will boost S&P 500 earnings per share by 12% in 2026.

This expectation framework explains why CPI in line with expectations triggers market reactions. Meeting expectations confirms inflation stability, which is the fundamental condition supporting the resonance of multiple positive factors.

Key economic data schedule this week

CPI is just the beginning. According to reports, several important economic data releases are scheduled this week:

• New home sales (January 13)
• PPI data (January 14)
• Retail sales (January 14)
• US Supreme Court tariff ruling (January 14)
• Initial unemployment claims (January 16)

These data will further confirm or revise market views on inflation, employment, and consumption, directly influencing the Fed’s policy path.

Connection to the crypto market

Gold’s rise also indirectly affects crypto market sentiment. According to reports, markets will remain sensitive to Tuesday’s CPI data, and the subsequent US Supreme Court tariff ruling may further influence cross-asset allocations and risk sentiment.

A weakening dollar and rising risk appetite generally benefit risk assets like Bitcoin, but when markets remain cautious about subsequent uncertainties, investors tend to lock in gains or reallocate into safe-haven assets first. This explains why, when gold rises, crypto market reactions tend to be relatively muted.

Key points to watch moving forward

• PPI data: Confirm whether producer-side inflation remains moderate
• Retail sales: Consumption strength directly impacts the Fed’s economic assessment
• Tariff ruling: May alter market expectations for inflation outlook
• Fed speeches: Officials’ wording will be an important reference for the rate cut timetable

Summary

CPI in line with expectations boosted gold. Behind this seemingly simple causal relationship lies a systemic reassessment of the macro environment in 2026. Confirmation of inflation stability opens a policy window for rate cuts, and a weaker dollar pushes up dollar-denominated gold. Meanwhile, market caution about subsequent risks also supports demand for traditional safe-haven assets.

The convergence of these multiple factors is shaping an expectation framework of “rate cuts + tax reforms + AI” resonance in 2026. Investors’ focus has shifted from “Is inflation out of control?” to “How will the rate cut pace be arranged?” and “Can policy resonance unfold as expected?” This week’s economic data and policy signals will further verify the credibility of this outlook.