Gold Prices Under Pressure

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Gold Prices Under Pressure

Gold Prices Under Pressure Ahead Of April CPI

The US CPI for the month of April is just around the corner, and Gold prices aren't reacting well ahead of it. It looks like the traders are favoring the US dollar over the yellow metal as they await the highly anticipated April CPI print.

Last week, Gold showed some strength after several signs of a cooldown in the US economy. This led many analysts to even say that the Fed now has no choice but to cut rates in 2024.

Gold Shows Rangebound Movement

Despite all the things going well for the Gold, it still remained below the April high. Now that the inflation data for April is due, Gold is still trading in a rangebound fashion.

Spot Gold is trading at $2357 with a -0.1% change, while the Gold futures (June) are trading at $2363 with a -0.5% change. The overall mood in the metal markets is one of worry as they await the US CPI for April.

The reason why Gold prices are so sensitive to the upcoming CPI is very simple... The interest rate decision by the Fed depends entirely on the inflation situation & lower rates favor the Gold.

The producer price index will be released on Tuesday, while the CPI will be released on Wednesday. Out of these two, the CPI (inflation) is the one that investors closely watch.

If the April print shows sticky inflation, it will further lower the prospects of rate cuts in 2024. This will put the metals under pressure but will be welcomed by the greenback and the bond yields.

Recent data has also shown a weakness in the US consumer confidence as they are still forecasting higher inflation for the year 2024.

Elsewhere, most precious metals are under pressure as the chances of higher rates for a long time have gone up. This has increased the opportunity cost associated with gold, copper, and silver.

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