Gold Retreats On Hot Us Cpi

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Gold Retreats On Hot Us Cpi

Gold Retreats From $2200 On Hot Us Cpi

stronger-than-expected inflation reading from the USA has sparked fears that rate cuts might not happen at the next meeting. As a result, gold prices also dropped from the $220 level amid a surge in greenback and bond yields.

Today, gold prices appear to be steady, but the bigger picture has definitely turned in favor of the US dollar. After all, higher interest rates are not favorable for Gold due to it being a non-yielding asset.

Besides the US CPI report, Gold was also affected by the profit-taking wave as the yellow metal touched the $2200 price level. The initial bounce seen in the Gold, which pushed it near $2200, was driven by the hopes that the Fed would deliver the first rate cut in a few months.

Gold Down By 2% On Inflation Woes

However, the latest CPI report has shown that a development like this is still not a reality, as inflation has shown a strong turnaround.

For now, the spot gold is seen trading at $2159 while the futures contract for April is trading at $2164 with a 0.1% change. In terms of percentage loss, both are down by nearly 2%, which suggests that fear is taking the driving seat for now.

According to economists, the speed of inflation growth in the USA was a lot more than expected. The bottom line is that inflation is still above the annual target (2%) set by the US Federal Reserve.

For now, there's no sense of urgency for the Fed to go ahead with rate cuts. After all, even the actual economic data hints that inflation is still out of control. Despite the hot CPI report, there's still a 70% chance that the June meeting will render a 0.25% rate cut.

After the release of the CPI, the focus is now on the producer price index along with the highly awaited retail sales from the USA. These two economic indicator will provide fresh impetus into the US economy and will allow the investors to look at the bigger picture.

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