Tomorrow the Labor Department will release its latest report on “headline” inflation. Headline inflation differs from core inflation in that it includes food and energy costs. It is been food, energy, and housing costs that have greatly impacted the day-to-day lives of lower- and middle-class citizens globally.

Economists, analysts, and market participants are laser-focused on the Labor Department’s CPI (Consumer Price Index) report for June which will be released on Wednesday, July 13. The advanced forecasts released have a common theme or consensus and that is that inflation will continue to run exceedingly hot.

Although trading this week was limited to four trading days due to a holiday weekend gold had a deep and severe price decline. Gold lost approximately $74 in trading this week opening at approximately $1814 on Tuesday and settling at $1741 today. This week’s price decline resulted in gold devaluing by 4%.

For the time in the last seven trading sessions, gold closed above its daily opening price and higher than the previous day’s closing price. However, there was no strong upside move, no higher high than the previous day, and no clear indication that the recent selling pressure has concluded.

This week market participants have focused intently on the future actions of the Federal Reserve as it pertains to rate hikes to be announced at the upcoming July and September FOMC meetings. Since 2018 the Federal Reserve has only raised rates on three occasions. However, all three rate hikes were announced and implemented at the last three FOMC meetings (March, May, and June).

As a direct result of an exceedingly strong U.S. dollar gold prices plummeted today resulting in major technical chart damage. The dollar has gained significant value over the last two weeks, however, longer term studies reveal that the dollar has been on an upward trajectory since the beginning of 2021 when the dollar index was fixed at 90.

The Federal Reserve’s monetary policy composed of aggressive rate hikes in tandem with a balance sheet reduction is intended to achieve price stability through lower inflation. The Federal Reserve is assuming that it can effectively reduce inflation without creating a recession.

Today’s report revealed that there is only marginal relief from rising inflation which continues at a record pace. The Federal Reserve’s preferred inflation report, the Personal Consumption Expenditures price index was released today. Inflation as seen through the PCE came in at 6.3% year-on-year for May equaling inflationary pressures for April.

Speaking at the European Central Bank annual conference in Sintra, Portugal today Chairman Powell made it clear that the Federal Reserve was committed to reducing inflation even if it means raising interest rates to levels that put economic growth at risk.

Both spot gold and gold futures closed lower on the day. However, in both cases, there was fractional buying bidding the precious yellow metal higher as well as dollar strength taking away all of those gains. Spot gold as seen through the Kitco gold index at 3:56 PM EDT, was fixed at $1819.60.