- The gold price recovers modestly around $1,940 due to USD consolidation.
- The stronger-than-expected CPI data this week may increase the likelihood that the Fed will raise interest rates again in December.
- Fears about China’s economic growth may cause the gold price to fall.
- Gold traders will be watching the US inflation data closely on Tuesday.
During the early Asian session on Monday, the gold price (XAU/USD) is trading in positive territory. The US Dollar’s (USD) consolidation lends some support to the precious metal. The higher US Treasury bond yield, on the other hand, may limit gold’s upside in the coming session. At the time of publication, the gold price was trading around $1,940, up 0.22% on the day.
On Friday, Federal Reserve (Fed) Bank of San Francisco President Mary Daly stated that she is not yet ready to say whether the central bank’s interest rate cycle is complete in order to return inflation to 2%. Meanwhile, Fed Chair Jerome Powell stated that if it becomes necessary to tighten policy further, the Fed will not hesitate. This week, traders will take more cues from key data, such as the US Consumer Price Index (CPI). The better-than-expected data may increase the likelihood that the Fed will raise interest rates again at its December meeting. Rising interest rates increase the opportunity cost of investing in non-yielding assets, implying a bearish outlook for precious metals.
Furthermore, concerns about China’s economic growth may cause the gold price to fall, as China is the world’s largest gold producer and consumer. The Chinese CPI fell 0.2% in October from the previous reading of 0%, according to data released last week. This week’s Chinese Retail Sales and Industrial Production figures will be released, and these figures may provide some insight into China’s economic situation.
The US Consumer Price Index (CPI) will be released on Tuesday. The monthly CPI is expected to fall to 0.1% in October, while the core CPI will remain unchanged at 0.3%. These events could give the gold price a clear direction.
XAU/USD
