Daily digest market movers: Gold price remains on edge as US yields jump
- Gold price finds temporary support near $2,160 after a sharp decline from all-time highs at $2,195. The surprisingly stubborn United States inflation data for February has cast doubts over expectations for the Federal Reserve reducing interest rates in the June policy meeting.
- The monthly core inflation data rose steadily by 0.4% against expectations of 0.3%. The annual core CPI rose 3.8%, higher than expectations of 3.7% but lower than the former reading of 3.9%. Fed policymakers generally consider the core inflation figures for decision-making on interest rates as the data strips off volatile food and energy prices, which are also impacted by external factors.
- The hotter-than-expected inflation data would not allow Fed policymakers to consider rate cuts in the near term. Fed policymakers have been reiterating that rate cuts would be appropriate only if they are confident that inflation will sustainably return to the 2% target.
- The impact of the latest US inflation report is visible in the traders’ bets on when the Fed will cut interest rates. According to the CME Fedwatch tool, the chances for a rate cut in June have dropped to 65% from above the 72% seen before the release of February’s inflation data.
- Meanwhile, investors shift their focus to the US Producer Price Index (PPI) and Retail Sales data for February, which will be published on Thursday. The PPI data will show the pace at which producers change prices of goods and services at factory gates. The Retail Sales data will indicate the strength in households’ spending, which feeds consumer price inflation. Retail Sales are forecasted to have increased by 0.8% after declining by 0.8% in January.
- Gold price finds temporary support near $2,160 after a sharp decline from all-time highs at $2,195. The surprisingly stubborn United States inflation data for February has cast doubts over expectations for the Federal Reserve reducing interest rates in the June policy meeting.
- The monthly core inflation data rose steadily by 0.4% against expectations of 0.3%. The annual core CPI rose 3.8%, higher than expectations of 3.7% but lower than the former reading of 3.9%. Fed policymakers generally consider the core inflation figures for decision-making on interest rates as the data strips off volatile food and energy prices, which are also impacted by external factors.
- The hotter-than-expected inflation data would not allow Fed policymakers to consider rate cuts in the near term. Fed policymakers have been reiterating that rate cuts would be appropriate only if they are confident that inflation will sustainably return to the 2% target.
- The impact of the latest US inflation report is visible in the traders’ bets on when the Fed will cut interest rates. According to the CME Fedwatch tool, the chances for a rate cut in June have dropped to 65% from above the 72% seen before the release of February’s inflation data.
- Meanwhile, investors shift their focus to the US Producer Price Index (PPI) and Retail Sales data for February, which will be published on Thursday. The PPI data will show the pace at which producers change prices of goods and services at factory gates. The Retail Sales data will indicate the strength in households’ spending, which feeds consumer price inflation. Retail Sales are forecasted to have increased by 0.8% after declining by 0.8% in January.
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