On Thursday (January 11), the U.S. Department of Labor released CPI data for December. Both overall and core inflation fell as scheduled. Spot gold was greatly boosted. It hit a high of $1,901.55 for the first time in seven months, recording an increase throughout the day 1.14%, and closed high at the $1896.70 level.
Data show that the overall CPI annual rate in December in the United States was in line with the expected 6.50%, the previous value was 7.10%; the core CPI annual rate in December was in line with the expected 5.70%, the previous value was 6%. The annual rate of core inflation hit its lowest level since December 2021. The outlook for the U.S. economy has been grim for months, with consumers forced to cut back on spending in response to high inflation and soaring interest rates. This reflects the impact of the Fed’s monetary tightening on the broader economy. To this end, the market continues to bet that the Fed will further reduce the rate hike to 25 basis points at the February policy meeting. According to the “New York Times” report on Wednesday (January 11), Boston Fed President Collins said that she is inclined to raise interest rates by only 25 basis points at the central bank’s upcoming policy meeting. This is expected to mark a return to normal rhythm of monetary policy adjustment. “Obviously, the CPI is very important. In this particular case, it does have a fairly direct policy impact, which is tied to how much the next Fed rate hike … the Fed (verbal above) can still go against market expectations, but the market can’t get it wrong.”
FundStrat founder Tom Lee wrote in a note: “We think one of the changes in the coming months is that the Fed will soon realize that it is cheaper to change the inflation narrative than to reverse a recession that has left millions out of work. ’ ” Lee noted that high interest rates could push the economy into a recession, while officials may be overestimating actual inflation. Previously, he pointed out that the CPI has lagged behind the actual situation of the economy, which means that the Fed may not need to raise interest rates as it has implied. While the 2-year and 10-year Treasury yield curves — the notorious recession predictors — are now at their most inverted levels in more than 40 years, a statistical analysis by Bloomberg found that there is a 100 percent chance that the U.S. will fall in recession later this year. into recession. However, as to whether the U.S. economy will fall into recession, there are still two schools of thought in the market, and it is necessary to continue to observe the development of U.S. economic data in order to draw a clearer conclusion.
On the technical level, from the 4-hour chart, the current stochastic indicator is sending a positive signal, waiting for the gold price to rise further. If it continues to cross the $1900.00 level, the higher target is aimed at $1928.60 per ounce. On the daily chart, the 60-day moving average has crossed the 120-day long-term moving average, and the support for gold’s rise is gradually increasing. Unless the price of gold falls below $1,865.00 an ounce, the bullish expectations will remain valid. It is expected that the trading of spot gold in the future market will be the rhythm of a small return and a big rise.
Wang Gang, Guangdong Branch, Bank of China
Opinions are personal and do not represent those of the organization