Gold

Tomorrow, the government will release the Fed’s preferred metric for gauging inflation, the core Personal Consumption Expenditure price index. The most recent forecasts are anticipating that core inflation on a month-over-month basis will double from 0.2% to 0.4%. Compared to one year ago (Jan. 2023) the core PCE came at 0.5%. For the second half of 2023, core inflation was only 0.1%.

After forty years working in the financial sector, I have witnessed many changes. One of the largest transformations has been the process of traders executing trades in stocks or commodities. Exchanges still provide the framework for specific requirements companies must meet to be listed on an exchange, liquidity, and guarantee of performance.

Market participants are shifting their focus to the US inflation report, which will come out later this week. These numbers will have an impact on the Federal Reserve’s interest rate cut timeline. On Thursday, the government will release the latest inflationary data vis-à-vis the Personal Consumption Expenditure (PCE) price index.

Even with multiple Federal Reserve officials reconfirming the Fed’s resolve to not raise rates too quickly, gold managed to have a solid gain on the day and week. As of 5:30 PM ET gold futures basis, the most active April contract gained $25.30 on the week, with the majority of the gains occurring today after factoring in a net gain of $18.70, or 0.92% taking gold futures to $2049.40. 

Recorded on Feb 21, 2024, 

Gary Wagner, Editor of TheGoldForecast.com, discusses the latest inflation report, as well as when the Federal Reserve is likely to begin cutting the Fed Funds rate. 

*This video was recorded on February 20, 2024 

Today, market participants were able to gain more insight into the inner thinking of the Federal Reserve officials through the release of the minutes from last month’s FOMC meeting. The document revealed that they changed the wording in the post-meeting statement to indicate that no cuts would be coming until Fed officials held “greater confidence” that inflation was receding.

According to a poll of economists conducted by Reuters, the Federal Reserve will initiate its first interest rate cut in June. This aligns loosely with the CME’s FedWatch tool which predicts only an 8.5% probability of the first rate cut in March, a 34.9% in May, and a 77.25% probability of lower rates in place by June.

U.S. Treasury Secretary Janet Yellen was very vocal about how Americans did not properly focus on the big picture as it pertains to yesterday’s CPI report. While acknowledging that the data revealed yesterday that inflation was fractionally higher than expectations, she believes that the real focus should have been on the big picture.

Today the U.S. Bureau of Labor Statistics released the consumer price index report for January.