Russia Surpasses Saudi Arabia, US CPI and Gold Outlook
Russia is using its oil exports to generate funds for the conflict in Ukraine and has recently surpassed Saudi Arabia as China's top energy supplier. While the headline US Consumer Price Index (CPI) has been decreasing, this trend may be temporary once the impact of lower energy prices is considered.
The Federal Reserve has pointed out the persistent price pressures in the services sector, and despite tightening policies, the labor market remains resilient in this segment of the economy. Market observers will closely watch the US CPI data on July 12th to gain insights into the Federal Reserve's stance leading up to the July 26th Federal Open Market Committee (FOMC) meeting.
In relation to the inflation outlook, the gold price could be influenced by the consequences for US real yields. Real yields are determined by subtracting the market-based inflation rate, derived from Treasury inflation-protected securities (TIPS), from the nominal yield of the same maturity.
This dynamic could have a dual effect on the precious metal. If the CPI rises again, it could prompt the Federal Reserve to adopt a more aggressive tightening stance initially, potentially bolstering the US Dollar. However, this could also elevate inflation expectations, causing a decline in real yields and making gold an attractive asset.
The reaction of Treasury yields will play a pivotal role in determining this outcome. If Treasury yields increase at a faster pace than the market-based inflation rate, real yields could rise, which might undermine the price of gold.
XAUUSD BUY 1914 -1916 💯💯
✅ TP1: 1922
✅ TP2: 1927
✅ TP3: 1932
🛑 SL: 1910
The Federal Reserve has pointed out the persistent price pressures in the services sector, and despite tightening policies, the labor market remains resilient in this segment of the economy. Market observers will closely watch the US CPI data on July 12th to gain insights into the Federal Reserve's stance leading up to the July 26th Federal Open Market Committee (FOMC) meeting.
In relation to the inflation outlook, the gold price could be influenced by the consequences for US real yields. Real yields are determined by subtracting the market-based inflation rate, derived from Treasury inflation-protected securities (TIPS), from the nominal yield of the same maturity.
This dynamic could have a dual effect on the precious metal. If the CPI rises again, it could prompt the Federal Reserve to adopt a more aggressive tightening stance initially, potentially bolstering the US Dollar. However, this could also elevate inflation expectations, causing a decline in real yields and making gold an attractive asset.
The reaction of Treasury yields will play a pivotal role in determining this outcome. If Treasury yields increase at a faster pace than the market-based inflation rate, real yields could rise, which might undermine the price of gold.
XAUUSD BUY 1914 -1916 💯💯
✅ TP1: 1922
✅ TP2: 1927
✅ TP3: 1932
🛑 SL: 1910
