US CPI Inflation May Trigger Gold Recovery, USD Correction

Did the door close on the 50 bps cut? Not so fast. Core US CPI could further weigh on skeptical markets, shaking gold, the US dollar and indices. Live coverage.

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CPI inflation lands on skeptical markets

No less than 254,000 jobs were created in September – leaving markets convinced that the strength of the US economy may lead even the doves at the Federal Reserve (Fed) to favor a smaller rate cut of 25 bps. However, if inflation falls, there is still room for some optimism about faster reductions in borrowing costs.

The Consumer Price Index (CPI) will show a continued fall in inflation in September, allowing the world’s most powerful central bank to take its foot off the pedal.

While non-farm payrolls (NFP) are a challenge for traders – a good result lowers the chances of quick rate cuts but is good news for the economy – it’s simple with inflation.

A strong CPI report means gold is up, stocks are up, the US dollar is up.

A weak CPI report is gold up, stocks up, US dollar bearish.

Number no. 1 to watch is core MoM CPI, which is the best representation of what the Fed cares about – recent developments in underlying inflation.

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