Could gold be subject to an eruption? Tomorrow’s CPI numbers will be a big part of the answer to that question

With the recent rise in inflationary pressures and consumer price indices reported for October tomorrow, Federal Reserve members have differences in terms of interest rate hikes next year.

In the duel camp are Federal Reserve Chairman Jerome Powell and Federal Reserve Vice President Richard Clarida, who both spoke Monday and reiterated that the repeal or incipient interest rate normalization will not begin until 2023 or in the fourth quarter of 2022. Hawkish camp spoke St. Louis Federal Reserve President James Bullard to FOX Business yesterday, where he said he expects the central bank will most likely have two rate hikes in 2022.

Vice President Clarida’s comments were seen as a bit more hawkish than President Powell’s statement that he may be open to raising interest rates faster than planned due to the rise in inflation.

The statements come at a critical time when the October CPI (Consumer Price Index) for October will be released tomorrow at. 8:30 AM EST. The latest figures reported by the government were for September, which showed an increase of 0.4%, a decline of 0.1% from year-on-year figures reported in August. This took the inflationary pressure from 5.4% to 5.3%. But even with that fraction, inflationary pressures are still at their highest level since 2008. Economists are currently forecasting an increase in October CPIs of 0.6%, which is 0.2% above the CPI increases for September, which came in at 0 , 4%.

Over the past year, the PCE (Personal Consumption Expenditures) price index has more than doubled the Federal Reserve’s target of 2%, with the latest figures coming in with the inflation rate of 4.4% compared to year-on-year figures. The PCE inflation method is preferred to be used by Federal Reserve members to measure inflation.

Currently, the labor market in the United States remains tight with employers seeking to hire millions of individuals. Disruptions in global supply chains remain high with hundreds of cargo ships unable to dock to unload their cargo in major ports across the United States, and they continued to disrupt the production of microchips. These factors could easily result in a higher percentage increase in the CPI forecast of +0.6%, which is currently 0.2% above last month’s inflation increase of 0.4%. The Federal Reserve will be pressured hard to maintain its dove stance in keeping the current Fed funds rate between zero and a ΒΌ%.

A combination of rising inflationary pressures and central banks globally indicates that they will keep interest rates at their current accommodatively low level in the short term and focus on maximum employment and strong GDP. GDP figures for the third quarter of 2021 came in at a dismal 2%, and given that GDP for the second quarter of 2021 came in at a robust 6.7%, if GDP for the fourth quarter of 2021 does not show robust gains from the third quarter will The Federal Reserve will be backed further into a corner in terms of raising interest rates to help combat higher inflationary pressures.

But TD Securities analysts say it is merely in a note to their clients that contained the following statement; “Gold prices are on the verge of an eruption. Given the extremely bad mood in precious metals in the last few months, the bar is low for prices to cut through the trend line resistance.”

Our daily subscribers to our service have seen me use the same forecast for the last two months, which is the chart in this article. We have predicted that gold would challenge and break $ 1837 by the end of 2021. We also predicted that gold would challenge $ 1900 per barrel. ounces in gold by the end of the first quarter of 2022. Although when I first presented our short-term and long-term forecast, it seemed like these figures were out of reach. Considering that gold today has risen for the fourth day in a row, and from kl. 17:55 EST is set at $ 1833.80, a net gain of $ 5.80 and traded at its highest today at $ 1834.80, the forecast seems more realistic than 2 months ago.

Our latest forecast is based on a combination of fundamental factors, including extreme increases in inflationary pressures, as well as technical areas that have peaked at both $ 1837 on September 3 and $ 1920, which was a peak in June. of this year.

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Wish you, as always, good trade and good health,

Disclaimer: The views expressed in this article are those of the author and may not reflect them Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. or the author guarantee such accuracy. This article is for informational purposes only. It is not an invitation to make any exchanges of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept liability for losses and / or damages arising from the use of this publication.


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