US CPI is expected to provide more clarity on the Federal Reserve’s interest rate trajectory
15 January 2025 - 07:29
byRahul Paswan
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Bengaluru — Gold prices edged lower on Wednesday as caution prevailed ahead of the US consumer price inflation report that could provide more clarity on the Federal Reserve’s interest rate trajectory.
Spot gold eased 0.1% to $2,672.76/oz by 3am GMT. US gold futures gained 0.3% to $2,689.70.
“If the CPI [consumer price index] data comes in higher, that might send gold lower because that kind of solidifies the view that the Fed more likely will be normalising last year’s dovish policy in 2025,” said Kelvin Wong, Oanda senior market analyst for Asia-Pacific.
The data, due at 1.30pm GMT, will be closely watched by market participants after last week's blowout jobs report underlined the strength of the US economy and led traders to heavily pare back bets of further Fed easing.
A Reuters poll forecast an annual rise of 2.9% versus 2.7% in November 2024 and a monthly increase of 0.3%.
Gold extended gains on Tuesday after data showed that the producer price index (PPI) rose on an annual basis in December, slightly raising hopes that the Fed would continue rate cuts this year.
Meanwhile, traders have fully priced in a pause in rate cut at the Fed’s January policy meeting.
With president-elect Donald Trump set to begin his second term next week, the focus remains on his policies that analysts expect will fuel inflation.
Nonyielding bullion is used as a hedge against inflation, though higher interest rates diminish its appeal.
“If gold prices were to dip further to break out of the November range down below $2,600, the next key level will be around $2,540, and I believe that could be an attractive level for long-term holders to consider,” Wong said.
According to Reuters technical analyst Wang Tao, spot gold may fall towards $2,635.
Spot silver shed 0.3% to $29.81/oz and palladium dropped 0.3% to $935.89. Platinum steadied at $935.92.
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Gold slips as traders await US inflation data
US CPI is expected to provide more clarity on the Federal Reserve’s interest rate trajectory
Bengaluru — Gold prices edged lower on Wednesday as caution prevailed ahead of the US consumer price inflation report that could provide more clarity on the Federal Reserve’s interest rate trajectory.
Spot gold eased 0.1% to $2,672.76/oz by 3am GMT. US gold futures gained 0.3% to $2,689.70.
“If the CPI [consumer price index] data comes in higher, that might send gold lower because that kind of solidifies the view that the Fed more likely will be normalising last year’s dovish policy in 2025,” said Kelvin Wong, Oanda senior market analyst for Asia-Pacific.
The data, due at 1.30pm GMT, will be closely watched by market participants after last week's blowout jobs report underlined the strength of the US economy and led traders to heavily pare back bets of further Fed easing.
A Reuters poll forecast an annual rise of 2.9% versus 2.7% in November 2024 and a monthly increase of 0.3%.
Gold extended gains on Tuesday after data showed that the producer price index (PPI) rose on an annual basis in December, slightly raising hopes that the Fed would continue rate cuts this year.
Meanwhile, traders have fully priced in a pause in rate cut at the Fed’s January policy meeting.
With president-elect Donald Trump set to begin his second term next week, the focus remains on his policies that analysts expect will fuel inflation.
Nonyielding bullion is used as a hedge against inflation, though higher interest rates diminish its appeal.
“If gold prices were to dip further to break out of the November range down below $2,600, the next key level will be around $2,540, and I believe that could be an attractive level for long-term holders to consider,” Wong said.
According to Reuters technical analyst Wang Tao, spot gold may fall towards $2,635.
Spot silver shed 0.3% to $29.81/oz and palladium dropped 0.3% to $935.89. Platinum steadied at $935.92.
Reuters
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