Gold down on resurgent US inflation
gold slid on Wednesday across the board hotter than expected US CPI inflation report that showed that both headline and core CPI climbed more than forecast. Spot gold closed with a loss of 0.80% at $2334.
The Core CPI rose 0.40% for the third straight month Vs the forecast of 0.30%. The headline CPI accelerated 3.50% on a y-o-y basis as the core was noted at 3.80%; both the readings exceeded their respective estimates of 3.4% and 3.70%. Housing and gasoline costs accounted for more than half of the increase in the overall CPI as shelter prices remained sticky as rent and owners' equivalent rent were both up 0.40%. The Supercore services gauge, which excludes housing, recorded a 0.65% monthly gain. Car insurance and medicare costs rose once again. The three-month annualized rate has now risen to 4.60% from under 4% in February. June rate cut hopes have all but vanished as markets now look for only two rate cuts. The US Dollar Index and the US yields surged on the CPI report pressurising commodities as risk appetite was hit.
Now, the US interest rates may stay higher for longer. The ten-year US yields took a peak above 4.50% level as the yields surged 4.27% to settle at 4.545%, whereas the US Dollar Index surged 1.05% to close at 105.19. The Dollar Index is expected to extend its gains to 108 levels in the near term, which will be bearish for commodities in general.
FOMC minutes showed that uncertainty over US inflation persists.
Today's US data include PPI (March) and weekly job data. Unsettling PPI readings will
