Key Point:
- Gold fell 1.3% on Monday.
- Inflation statistics are coming on Wednesday.
- CPI hints at Fed’s next steps.
Consumer prices are expected to decline slightly in April. If something unexpected happens, it can cause sharp fluctuations across the market.
- gold price
XAUUSD It pared back some of its recent gains as markets broadly braced for Wednesday’s massive data breach. The precious metal gave up about 1.3% to open the week, rising from Monday’s high of $2,365 to a daily low of $2,331 per troy ounce. However, early on Tuesday, the gold bug pushed the commodity to levels near $2,345. - gold price decline It comes before Wednesday’s consumer price index, or simply inflation statistics. This reading will clarify the Fed’s interest rate schedule. If inflation actually reaches the expected 3.4% rise in April (down from 3.5% in March), investors may find some reprieve and peace of mind. But if the results are better than expected, the market could panic about what the Fed will do next.
- lower inflation It’s part of the Fed’s master plan. The US central bank has a mission to keep prices in check. And it’s on their wish list this year, right above interest rate cuts. Ideally, one should follow the other. No decline in inflation will likely mean no reduction in interest rates. Where is the money in this? Gold is a non-yielding asset. This means investors may choose to hold USD in a high-yield environment with rising interest rates.
