The gold price has reacted positively to the latest US inflation figures, which again came in below analyst expectations.
The bullion price jumped above $1,800 an ounce after the CPI posted the smallest monthly increase in over a year, confirming that the US inflation rally is continuing to slow down. Prices have risen by only 0.2% in November, while the YoY data was just above 7% (0.2% below expectations).
In other words, it looks increasingly likely that the worst of inflation has passed with the tightening process of the last 12 months delivering results and reducing the hawkish pressure on the Federal Reserve.
Stock markets and gold reacted by again moving in the same direction, with significant gains for both (later partially reabsorbed by the markets). Focusing on gold, the bullion price accelerated just after the release of the data, reaching a top at $1,840, before consolidating to the $1,820-$1,830 area.
After the CPI data, investors are now waiting for the Federal Open Market Committee, where a 0.5% rate hike seems almost certain. This will be followed by the latest rate decisions from the Bank of England and the European Central Bank with both of them forced to raise rates, even if this increases the risk of recession in both regions.
Any dovish comment coming from policymakers could give new fuel to gold’s recovery. Vice versa, hawkish rhetoric could determine a consolidation phase or some moderate correction, even if the main trend still appears positive.
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