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Market Waits for CPI; Investors Expect the Interest Rates Raise in the Middle of 2022


On Tuesday (November 9) the US dollar index fell slightly, and investors waited for the inflation data to be released on Wednesday to gauge whether prices have accelerated. Gold futures prices recorded a fourth consecutive trading day increase, setting a record for the longest continuous rise since July 7. The U.S. producer price index in October showed that inflation continued to rise, which supported the gold price. U.S. oil rose more than 3% in late trading to $84.57 per barrel, closing at its highest level in nearly two weeks; a US energy report predicted that crude oil supply would increase next year, leading the market to speculate that the Biden administration may shelve the release of the country’s emergency reserves s plan.

The U.S. October overall consumer price index and core CPI annual rates are expected to be higher than expected, increasing by 5.9% and 4.3% respectively, exceeding the 2% target set by the Federal Reserve by more than twice, due to tight labor markets and chaotic global supply chains.

Ryan Sweet, senior economist at Moody’s in Pennsylvania, said: “Inflationary pressures may not fade as quickly as previously thought, especially for companies, because of global supply chain issues. High inflation is increasing the Fed’s suffering. They are under pressure, but they have not shown signs of yielding because they want full employment in the labor market.” A survey previously released by the Institute of Supply Management (ISM) showed that manufacturers and service industry price indicators accelerated in October, and manufacturers complained. "Long delivery time for raw materials, continued shortage of key materials, rising commodity prices, and difficulty in product transportation."

Investors currently expect the Fed to raise interest rates in the middle of next year. However, there are more and more debates among the Fed decision-makers about how many more jobs the economy can add and how long high inflation can be tolerated. Fed Chairman Powell reiterated on Tuesday that he continues to pay attention to those workers who are still holding a wait-and-see attitude towards returning to the job market. “When we assess whether we are maximizing employment, we will deliberately review a series of indicators.” Powell also said last week that despite The higher-than-expected inflation is disturbed, but the Fed will remain patient and prioritize further maximizing employment before raising interest rates. However, some Fed officials pointed out that strong economic growth and job growth prove that the economy can start to be self-reliant.

Harshal Barot, senior research consultant for South Asia at Metals Focus, said: "Rising interest rates may not be as fast as the market initially expected, and inflation continues to remain high, creating a favorable macro background for the precious metals rebound. However, if the CPI data is higher than expected, it may be Leading gold bulls to profit, because people will deepen expectations that the Fed will have to start raising interest rates to control inflation." Barot added that gold is also facing resistance at $1,830.

Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.

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