Gold Rises as the US Dollar Weakens After Inflation Report
Gold (XAU) gained 0.87% on Tuesday as the started to weaken after the U.S. inflation data demonstrated a slowdown, reinforcing beliefs that the U.S. interest rate might have already peaked.
U.S. inflation indicated that U.S. consumer prices didn’t change in October, and the year-over-year increase in core inflation numbers was the least significant in two years. The (DXY) and benchmark fell towards their two-month low due to lower-than-expected inflation figures. Thus, the opportunity cost of holding gold decreased. Following Tuesday’s data, U.S. interest rate futures indicated a notable shift in market expectations regarding the U.S. interest rate trajectory. The chances of a rate cut by May 2024 jumped from 34% to 65%, according to the CME’s FedWatch tool. Thus, anticipations of decreasing U.S. interest rates increase the gold’s appeal.
continued to rise during the Asian and early European trading sessions. Today, traders should focus on the U.S. Producer Price Index (PPI) report due at 1:30 p.m. UTC. Higher-than-expected PPI figures may bring the XAU/USD price below 1,955. However, the short-term bullish trend in the pair may continue if the figures are lower than expected.
The British Pound Rose Confidently as U.S. Inflation Slowed
Yesterday, rose by 1.79% after lower-than-expected U.S. Consumer Price Index (CPI) figures.
On Tuesday, the GBP/USD pair strengthened following the mixed employment data from the U.K. and the U.S. CPI reports. Lower-than-expected U.S. inflation numbers caused significant shifts in the global markets, marking some of the most intense movements this year. Contrary to the anticipated 0.1% growth, the U.S. CPI remained unchanged in October. The core inflation rate increased by only 0.2% instead of the expected 0.3% rise. This data sharply contrasted with the forecast, leading to the reassessment of the U.S. rate hike trajectory.
During the early European trading session, GBP/USD declined following the release of lower-than-anticipated U.K. CPI numbers. Today’s key event is the U.S. Producer Price Index (PPI) report due at 1:30 p.m. UTC. If the PPI figures exceed the forecast, GBP/USD could fall below 1.24500. Meanwhile, lower-than-expected PPI figures could support the short-term upward trend in GBP/USD.
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