Gold focus :
ICDX gold price weakened by -0.65% compared to the previous week with the dollar index sentiment strengthening 0.57% after a series of US economic data gave rise to market expectations of a tighter policy by the US central bank.
The Bureau of Labor Statistics released the US Consumer Price Index (CPI) rose 0.5% on a monthly basis compared to the previous month which moved at 0.1% speed. On an annual basis, the US CPI increased 6.4%, lower than the previous month's 6.5% increase. Meanwhile, the US Producer Price Index (PPI) moved at 0.7% pace on a monthly basis after contracting -0.2% in the previous month. A rise in monthly consumer and producer price indexes have fueled expectations that the Federal Reserve still has more work to do to tame inflation.
A series of data released showed that the resilience of the US economy was much better than expected. Census Bureau reported US Retail Sales m/m increased by 3% compared to the previous month which decreased -1.1%. The US Department of Labor released US Unemployment Claims fell slightly to 194K from 195K the previous week, indicating labor market conditions are still tight. The housing sector also showed positive data with the US NAHB Housing Market Index was released at level 42, an increase compared to the previous report's 35. The increase in retail sales along with other upbeat data from the labor and housing sectors increased optimism for economic growth while alleviating fears of a recession.
The Fed's Interest Rate Policy Cues
Gold price movements were influenced by the performance of the US dollar index so that the US central bank's monetary policy tightening strategy as a tool to reduce inflation became a driving sentiment for gold prices. Several Fed officials voiced their views on the continuation of the benchmark interest rate hike. Fed President St. Louis James Bullard said a policy of continued rate hikes could help lock in a disinflationary trend throughout 2023 as well as favoring a 50 basis point rate hike at the upcoming meeting. Richmond Fed President Thomas Barkin agreed the Fed still needs to raise interest rates but can stick with a 25 basis point hike at its next meeting. Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva described the IMF's prospects for 2023 by estimating a slowdown in economic growth and inflation to remain a concern. Georgieva said the IMF expects monetary policy tightening this year but does not project it continue way into 2024.
Data / Events
USD - Flash Services PMI
USD - Flash Manufacturing PMI
USD - Existing Home Sales
USD - FOMC Meeting Minutes
USD - Prelim GDP q/q
USD - Unemployment Claims
USD - Core PCE Price Index m/m
USD - New Home Sales
USD - Revised UoM Consumer Sentiment
USD - Revised UoM Inflation Expectations
Source: ICDX Research