Gold barely reacted to last week's August inflation report, a sign investors are now weighing the Federal Reserve's credibility rather than the inflation data itself. Traders have pushed the odds of a rate move at this week's Fed meeting above 80%, and the next real signal for gold will come from the Treasury market.
Gold traded at $4,337.00, down 0.34% even after the U.S. consumer-price-index report for August came in. Gold should have had a difficult day when the data came out, but it didn't, and that muted reaction sent a message of its own.
The CPI rose 0.4% for the month, while annual inflation held at 3.4%. Core prices, which exclude food and energy, increased 0.3%, slightly more than expected. Traders responded by sharply raising the odds of a Fed rate move at its Sept. 15-16 meeting to above 80%.
According to Naeem Aslam, chief investment officer at Zaye Capital Markets, the most important signal for gold will come from the Treasury market, which will reflect whether investors believe the Fed has the resolve to fight inflation. The U.S. 10-year yield stood at 5.014%. The 30-year traded at 5.367%, and the 2-year stood at 4.665%.
The dollar index also edged 0.23% higher as traders positioned ahead of the Fed's decision.
Source: MarketWatch.com – Top Stories
Trading involves risk.
Risk Disclaimer
