- Gold edged higher and touched two weeks high amid broad US dollar weakness.
- US CPI is expect to rise to the largest since 1982.
- Comments from White house and Federal Reserve officials propels US CPI chatters.
The yellow metal traded high and reached two-week high of $1835 against the greenback during Thursday Asian session. The broad US dollar and being the Safe haven asset, gold attracted the traders during this cautious market sentiment amid inflation fears.
U.S. consumer price index for January which is due later in the day is expected to rise 0.4%, culminating in an annual rise of 7.2%, which would be the largest such increase since 1982.
Stephen Innes, managing partner at SPI Asset Management said “I think the dollar is going to weaken off despite yields going higher because every other central bank is raising interest rates… to defend against inflation.” “If the Fed starts ramping up rates too quickly, it’s not good for the economy, especially with every other central bank doing the same thing in unison. In that sense, gold could actually be a pretty decent hedge over the long term.”
Latest comments from the White House and the US Federal Reserve (Fed) challenges the gold buyers ahead of CPI data.
The White House (WH) conveyed expectations of a higher YoY inflation figure and said that “Its irrelevant month on month number will continue trending lower the rest of the year.” After that, WH Economic Adviser Brian Deese said that “he sees reason to think that factors boosting inflation will moderate over time.”
Elsewhere, Atlanta Fed president Raphael Bostic said in an interview on Wednesday that “There is some evidence we are on the cusp” of inflation that begins to ease perhaps by midyear” In separate comments Cleveland Fed president Loretta Mester said she also expected inflation to ease this year as the Fed steadily tightens credit.
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