Today, the most significant statistics associated with modern finance for the United States, which is the greatest economy in the world, have provided traders with the much-needed good news they have been looking for. The market did not price in the lower US CPI number, a move that gold traders are enthusiastically celebrating.
The US CPI m/m data printed a value of 0.0% against the forecast of 0.1%—again, a number that was better than the forecast and something that gold players didn't consider as their base case scenario. The reading for the previous month was 0.3%, which, when compared to the previous number, explains why the dollar index plummeted significantly.
Similarly, the data produced by the US CPI was excellent news, but let's not forget that the number is still over one percent higher than the Fed's desired target of 2%. The Fed has a long way to go, and if we look at the gold price action, the moves have been significant, as traders are pricing a more dovish move from the Fed.
Jerome Powell, the Chairman of the Federal Reserve, is expected to oppose early rate cuts when he comes under scrutiny later today. His baseline is more than likely to be that the data was great, but we need to have more data in the same direction to be confident in our approach. Although the gold price's massive move is intriguing, traders should be aware that the prices are far from their mean, indicating a high likelihood of a retracement or slowdown in the current momentum.
The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc.
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