Today’s Consumer Price Index (CPI) figures from the US Bureau of Labor Statistics are due out at 12:30 GMT. Economists at Commerzbank analyze how could Gold react to US inflation data.

Weaker than expected CPI to benefit XAU/USD

“Today’s reaction of the Gold price to the figures is likely to be anything but trivial.”

“It is true that a higher than anticipated inflation rate would fuel short-term rate hike speculation. However, this would not necessarily be bad news for Gold if such rate hikes were regarded as a policy error that could lead to a more pronounced weakening of the economy and thus a more pronounced interest rate turnaround at a later date. Higher inflation figures would only have a negative impact on XAU/USD if the market were to upwardly correct its interest rate expectations for the long term, too.”

“Weaker than expected price data would probably prove less ambivalent for the Gold price, on the other hand, as they would doubtless boost rate cut expectations and thus benefit the yellow metal.”

See – US CPI: Banks Preview, inflation softening, good news on the horizon?