Last week, gold failed to make a convincing move in either direction. August inflation data from the US next week could have a significant impact on gold’s valuation, FXStreet’s Eren Sengezer reports.

August inflation data from the US could trigger a significant reaction

“The US Bureau of Labor Statistics will release the Consumer Price Index (CPI) data for August on Tuesday. FOMC policymakers refrained from confirming a 75 bps rate hike in September and a soft inflation report could cause the probability of a 50 bps rate increase to rise. In that scenario, US T-bond yields are likely to fall sharply and trigger a decisive rally in gold. On the flip side, stronger-than-expected CPI prints could cement a 75 bps rate hike and not allow XAU/USD to turn north.”

“On Friday, August Industrial Production and Retail Sales data from China will be looked upon for fresh impetus. If these figures disappoint, gold could have a hard time finding demand, with investors losing hope for a steady recovery in gold’s demand and vice versa.”

“The University of Michigan’s flash September Consumer Sentiment Index report will be released on Friday. A decline in 5-10 year consumer inflation expectations should hurt the dollar, while an unexpected increase could help the currency gather strength and weigh on XAU/USD.”