Gold has surged past the $1,965/oz mark following the US March CPI print. Above target inflation expectations are set to lift the yellow metal – a fact less robust Core CPI will not change, strategists at TD Securities report.

A more moderate Core CPI print spells good news for gold 

“Headline inflation jumped to 8.5%. With US March consumer prices rising by the most since late 1981 and most components showing large y/y increases, many gold traders continue to believe that inflation will not be as transitory as policymakers hoped. But at the same time, core CPI has moderated, which likely prompted yields across the treasury curve to slump, lowering real yields.” 

“Real rates, a key determinant of gold price levels, may not move up as quickly as if core inflation was accelerating as quickly as the headline.”

“If the stars continue to align for gold, $1,982/oz looks within reach in the not too distant future and the yellow metal could test the recent high of $2,070/oz.”