Gold Price Forecast: XAU/USD & CPI Commentary

<p>&nbsp;The increase in oil prices that has occurred since September is expected to have an impact on American inflation.</p><p><br /></p><p>The initial expectation of the consumer price index (CPI) forecast report in America shows the expectation of a "decrease" in the value of inflation.</p><p><br /></p><p>See below for preliminary estimates of consumer price index data reports that have been released by world economic market analysts.</p><p><br /></p><p>Consumer price index ahead of expectations</p><p>CPI, excl. food &amp; energy (MoM) 0.3% 0.3%</p><p>CPI (YoY) 3.7% 3.6%</p><p>Core CPI (YoY) 4.3% 4.1%</p><p>We see the increase in world oil prices that has continued since the beginning of September to have an impact on the increase in the inflation rate in America.</p><p><br /></p><p>The minutes of the FOMC meeting that were published early this morning are seen to have failed to change market sentiment.</p><p><br /></p><p>The report states that the FOMC committee members are in favor of maintaining the existing interest rates for a longer period.</p><p><br /></p><p>Nevertheless, the preliminary data of the "FED FUND RATE" projection has shown as much as 5.6% for the year 2023, giving an indication that the possibility of an interest rate increase for the year 2023 remains open.</p><p><br /></p><p>September Producer Price Index (PPI) report</p><p><br /></p><p>The PPI is seen to have increased by 2.2% on an annual basis, making it an increase of 2% in September compared to 1.6% for August 2023. This producer price index has increased due to the increase in oil prices that has occurred throughout September.</p><p><br /></p><p>As such, we expect tonight's CPI data report to see an increase in the inflation reading on the September data release.</p><p><br /></p><p>Based on trends and components of the consumer price index in America, there is a risk of upside since the release of NFP employment data earlier this month, where a sharp increase in employment opportunities and the maintenance of income ladders are able to encourage consumers in the country to spend more.</p><p><br /></p><p>Nevertheless, the interest rate increase in September still remained at 5.50%. This is able to constrain consumers in the country to overspend.</p><p><br /></p><p>In addition, the inflation reading for the "Shelter Inflation" component (house rent price index, utility bills) is seen to continue to decrease and is able to provide a projection of the decrease in inflation in the country.</p><p><br /></p><p>What is certain, the release of the CPI data report tonight is seen to provide a clear indication of the FED's further actions whether to maintain the existing interest rate (5.5%) or raise the interest rate by 0.25bps (5.75%) at the November 2023 FOMC meeting.</p><p><br /></p><p>Gold vs Dollar</p><p><br /></p><p><br /></p><p><br /></p><p>XAU/USD is seen to have experienced a surge in price since the announcement of the NFP data report last week.</p><p><br /></p><p>Israel-Gaza geopolitical sentiment has given gold prices a boost this week. However, the focus of the gold market is now seen on tonight's CPI data report.</p><p><br /></p><p>Therefore, gold is seen to be able to reach the $1,890 level and make a decline at least to the $1,860 price level. However, this scenario will be canceled if the $1,890 level is successfully broken all at once towards the $1,906 level.</p>

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