Gold futures closed higher on Tuesday, finding support from the weakening US dollar following a report showing US inflation rising at the slowest pace in seven months in August, according to market analysts Myra P. Saefong and Mark DeCambre. In this context, analysts noted that the December gold contract rose 0.7% to settle at $1,807.10, reversing the route from an earlier decline to $1,780.60. According to FactSet data, the contract was the highest level for the most active contract since Sept.
Chintan Karnani: Lower-than-expected CPI supports dollar-denominated gold prices
The U.S. Government said on Tuesday that the consumer price index rose 0.3% in August, compared to a 0.5% increase in July. Economists polled by the Wall Street Journal estimate that the cost of living, measured in CPI, rose 0.4% in August. Chintan Karnani, research director of Insignia Consultants, told MarketWatch:
The lower-than-expected consumer price index figure caused the US dollar to weaken. This situation supports gold prices in dollar terms. The data also dampened expectations of an early contraction by the Federal Reserve.
Chintan Karnani added that Thursday’s US August retail sales figures will affect the price of gold and the US dollar index:
Traders look for clues to trends in the US economy in the last quarter of the year and readjust their fourth quarter portfolios based on incoming US economic data releases.
“Every disclosure of US economic data matters”
In addition to the CPI data itself, the Fed will use inputs next week, including the CPI report, to help provide liquidity to the markets and outline its plans to cut down on COVID-era bond purchases. Craig Erlam, senior market analyst at Oanda Corp., shared his assessments in a research note:
The yellow metal will continue to be sensitive to US economic data this week, especially today’s inflation data, and any reduction in the coming weeks will be a positive catalyst.
cryptocoin.com As you may know from the news, many members of the Federal Open Market Committee that sets the interest rate, including Chairman Jerome Powell, recently said that the central bank should reduce its monthly purchases of Treasury and mortgage-backed securities of 120 billion dollars by the end of the year. Research director Chintan Karnani commented:
Every release of US economic data is important as traders will use it to assess the strength of the next quarter.
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