Whether you describe the underlying cause of recent changes in financial assets as a tug of war, double-edged sword or battle between opposing forces, inflation versus rising interest rates continue to cause market sentiment to fluctuate. Depending on whether inflation or rates are the market participants’ primary focus points. This mood results in bullish or bearish flows for gold and the dollar as safe haven.
Today, gold traded at a maximum of $ 1850.30 to a low of $ 1824.50, and from kl. 17:55 EDT had a fraction of ascent. Gold futures had a trading range of around $ 25, but only managed to win $ 0.90 on the day. August gold futures are currently set at $ 1839.70. This could be mentioned as a true example of the fact that opposing forces have given no victory to any of the factions. With the FOMC meeting off the road for this month, traders are awaiting the latest inflation data.
Today’s fractional increases in gold prices occur in connection with dollar weakness, which gave tailwinds to pricing. The dollar index lost 0.2% today and is currently set at 104.00. Crude oil has recently traded as high as $ 123 per barrel. barrel. However, oil prices have fallen and are currently set at $ 104.19. While crude oil prices are certainly still high and over $ 100 per barrel. barrel, the oil has retreated by over 15% in the last two weeks.
On Thursday, June 30, the government will release the personal consumer price index (PCE) for May. The CPI (consumer price index) showed no sign of inflationary pressures easing, in fact it showed the exact opposite with the inflation index running at its highest level since the 8.6% pandemic. The most recent report for the personal consumption price index was 6.3% in April, 6.6% in March and 6.3% in February.
President Powell refers to this index as a measure of news headlines because it includes the cost of both food and energy, which is removed from PCE, which is a measure of core inflation. Because Federal Reserve tools cannot handle changes in energy and food costs, the Federal Reserve prefers PCE over CPI.
The PCE Inflation Report will be a key component in assisting federal members at the FOMC meeting in July as they determine potential changes in their monetary policy tightening. During the press conference at the FOMC meeting this month, Powell said it is highly likely that the Fed will raise interest rates by three quarters of a percent or 75 basis points again in July.
With the recent economic outlook from the Federal Reserve indicating an economic downturn and reduced GDP combined with higher unemployment, it certainly opens the door to the possibility of stagflation. Next week’s PCE report will cover much of the data-dependent decisions made by the Federal Reserve.
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Wish you, as always, good trade,
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