Gold Perks Up Ahead of Key US Inflation Data That Could Show Price Rises Have Peaked

Inflation is once again the focus of attention today with the release of the US’ April data.

The market is expecting the figure to be slightly lower than the previous month but remain at a historically high level, above 8%. 

While any step lower will be welcomed with hopes that inflation in the US may have peaked, the pace consumer prices are rising remains far above the Federal Reserve’s target rate of 2% rate, forcing the US central bank to continue its series of hawkish measures to bring inflation down to more comfortable levels.

Despite this providing a negative outlook for gold, the price of the precious metal has perked up early on Wednesday to trade near $1,850 an ounce. In fact, equity indices are generally pointing upwards after a volatile few days of trading so far in May.

Live Gold Price – $/oz

For both gold and equities, today’s gains are likely a reflection of both asset classes being oversold in recent days after a brutal end to last week and start of this week in the markets. 

The outlook for a series of interest rate hikes by the Federal Reserve, as well as the Bank of England and European Central Bank, over the coming months does cap how high gold can climb.

On the other side, any dips in gold’s price will attract buying interest from traders noting gold’s appeal as a hedge against inflation as well as a valued haven asset while the war in Ukraine continues. As such, gold is likely to remain within the $1,840-$1,870 an ounce range until a significant new factor emerges to outweigh the dominant drivers currently.

Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. 

As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwashing while investing sustainably.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis