Editors Note: With so much market volatility, stay on top of daily news! Tuesday, the U.S. Labor Department said its U.S. Consumer Price Index rose 0.6% in March, after a 0.4% rise in February. Consensus projections were anticipating to see a 0.5% increase.
In initial reaction, the gold market was treading water in positive territory. The market is beginning to attract some bullish attention following the inflation data.
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(Kitco News) – In a delayed reaction, the gold market is seeing renewed bullish momentum as customer rate pressures selected up in March.
Tuesday, the U.S. Labor Department stated its U.S. Consumer Price Index rose 0.6% in March, after a 0.4% rise in February. The information was somewhat strong than anticipated. Consensus projections were anticipating to see a 0.5% increase.
“The March 1-month increase was the largest rise given that a 0.6-percent increase in August 2012,” the report said.
The report said that annual headline inflation increased 2.6% last month.
Stripping out unpredictable food and energy costs, core inflation rose 0.3%, likewise being available in higher than expectations. Economists were anticipating to see a 0.2% increase.
For the year, core CPI rose 1.6%, the report stated.
In preliminary reaction, the gold market was treading water in positive area. However, the market is starting to draw in some bullish attention following the inflation data. June gold futures last traded at $1,741.30 an ounce, up 0.50% on the day.
Economists and market analysts keep in mind that increasing inflation pressures will assist to alleviate a few of the selling pressure in the gold market as nominal bond yields have seen a sharp rise because the start of the year. Market experts note that greater inflation pressures indicate that genuine rate of interest will remain at traditionally low levels.
Nevertheless, some market experts keep in mind that the danger in higher inflation is that it could trigger the Federal Reserve to raise rate of interest quickly than anticipated.
The Federal Reserve has actually said consistently during the last few weeks that it is not anticipating to raise interest rates up until they see signs that the U.S. economy is well on its way to recovering from the COVID-19 pandemic.
Although inflation is on the increase, numerous economic experts are cautioning consumers to look past a few of the data as last years COVID-19 interruptions will impact yearly forecasts. CIBC said that they anticipate CPI to increase to 2.5% this year, however this will be transitory.
Katherine Judge, senior economist at CIBC, stated that financiers could see a rate hike quicker than expected.
“It wont be till 2022 when an earlier closing of the output space causes core cost pressures moderately above 2% on a more sustainable basis, however, permitting the Fed to trek rates as early as Q3 of 2022,” said she said.
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Editors Note: The short article was upgraded to show a little rally in gold rates following the CPI data