Gold trading reminder: U.S. CPI rose more than expected, don’t even think about cutting interest rates in June! Gold price falls from record high, meeting minutes "make up for the loss"

In early trading in Asia on Thursday (April 11), spot gold fluctuated within a narrow range and was currently trading at $2,336.45 per ounce. The price of gold fell from a record high on Wednesday, falling below the 2320 mark to US$2319.30 per ounce during the session and closing at US$2333.39 per ounce. As previously stronger-than-expected inflation data weakened expectations of an early U.S. interest rate cut, the dollar and government bond yields strengthened. In addition, The minutes of the Federal Reserve meeting showed that high interest rates may need to be maintained for a longer period of time, which also put pressure on gold prices, but concerns about the geopolitical situation in the Middle East still provided some support to gold prices.

Tai Wong, an independent metal trader in New York, said: "Strong employment data and high CPI are interfering with the Federal Reserve's interest rate cut plan, but gold, like inflation, is still naughty."

U.S. consumer prices rose more than expected in March, possibly prompting the Fed to postpone its first interest rate cut until September

U.S. consumer prices rose more than expected in March as gasoline prices and rents continued to rise, and the data prompted financial markets to expect the Federal Reserve to postpone another interest rate cut until September.

The third straight month of strong consumer price data also suggests that the pickup in inflation in January and February cannot be entirely attributed to business price hikes at the start of the year, as most economists believe.

Data released last week showed that U.S. job growth accelerated in March, with the unemployment rate falling to 3.8% from 3.9% in February. The cost of living remains stubbornly high, which will have a great impact on the U.S. presidential election on November 5. Still, there are some hopeful signs in the report, such as flat supermarket food prices and falling motor vehicle prices, reviving commodity deflation.

"The data does not completely eliminate the possibility of action by the Fed this year, but it certainly reduces the likelihood of a rate cut in the coming months," said Phillip Neuhart, director of markets and economic research at First Citizens.

The U.S. Department of Labor's Bureau of Labor Statistics said on Wednesday that the consumer price index (CPI) rose 0.4% month-on-month in March, the same as February's increase. Gasoline prices rose 1.7% in March after rising 3.8% in February. Housing costs, including rent, rose 0.4%, the same increase as February.

Gasoline and housing accounted for more than half of the CPI increase. Food prices rose 0.1% but were flat at grocery stores as prices for butter, cereal and baked goods posted their largest monthly declines since 1989.

CPI rose by 3.5% year-on-year in March, the largest increase since September, and rose by 3.2% in February. Economists interviewed previously expected the CPI to rise 0.3% month-on-month and 3.4% year-on-year in March.

Although year-on-year consumer price increases have eased from a peak of 9.1% hit in June 2022, the trend of slowing inflation has effectively stalled in recent months. Excluding volatile food and energy, CPI rose 0.4% month-on-month in March, basically the same as the increases in February and January. Before rounding, core CPI rose 0.359% month-on-month, which economists believe is a sign that inflation is not out of control. The month-on-month increase in core CPI was boosted by rents.

Shortly after the data was released, financial markets pushed back expectations for the Fed's first rate cut from June to September, according to CME's FedWatch tool. They now expect just two rate cuts this year, instead of the three Fed officials envisaged last month. A handful of economists believe the window for rate cuts is closing.

Core CPI rose 3.8% year-on-year in March, the same as February’s increase. The annualized CPI growth rate in the first quarter was 4.2%, which was faster than the 3.4% in the fourth quarter of last year.

Sarah House, senior economist at Wells Fargo, said: "The rebound in inflation in the first quarter reflects the typically volatile nature of monthly price measures, and this rebound is likely to be a 'bump' on the road back to the Fed's inflation target rather than a slowdown in inflation. signs that the trend is reversing.

Based on available data, economists estimate that the core PCE price index rose 0.3% month-on-month in March, the same as February's increase, and the year-on-year increase will slow to 2.7% from February's 2.8%. March producer price data due out on Thursday could change those forecasts.

After the data was released, the U.S. dollar index rose 1%, hitting a high of 105.30 on Wednesday. U.S. government bond yields soared, with the U.S. 10-year Treasury bond yield hitting a high of 4.568%, both new highs since November 14, making non-yielding gold Decreased appeal.

Fed meeting minutes: The Fed is worried that progress in slowing inflation has stalled and may need to maintain high interest rates for longer.

Even before Wednesday's higher-than-expected U.S. inflation data, Fed officials had begun to worry last month that progress in slowing U.S. inflation might have stalled and that a longer period of tightening monetary policy might be needed to control the pace of rising prices.

"Some" policymakers at the Fed's March 19-20 meeting even raised the possibility that the current policy rate of 5.25%-5.50% would be "more restrictive than hoped for," according to minutes released Wednesday. Less, which could increase the momentum of aggregate demand and put upward pressure on inflation," a logic that could be used to justify another rate hike.

Forecasts released at that meeting showed that no policymakers intended to raise policy rates, and the two-day meeting came against a backdrop of record high stock prices and falling market interest rates.

But the comments in the minutes reflect the complex situation Fed officials are grappling with as they debate the greater risk: too tight monetary policy for too long and harming the economy, or of easing policy too early and failing to bring inflation back to normal. 2% target?

If Fed officials were leaning toward a rate cut at the start of the year given last year's rapid decline in inflation, the minutes showed the weight of the evidence may be shifting. As of last month's meeting, they expected 75 basis points of rate cuts this year.

"Participants generally noted that they were uncertain about the persistence of high inflation and said that recent data did not increase their confidence that inflation will continue to fall to 2%," the meeting minutes said. Data released earlier may have solidified this view. A point of view. Data showed inflation unexpectedly jumped last month.

Some Fed officials continue to believe that important items such as housing inflation will begin to slow, with "several" officials saying that productivity improvements can keep economic growth strong while inflation continues to decline.

"Many" of those policymakers said they had encountered resistance in "assessing how recent immigration trends will impact" the economy, a factor that Fed staff took into account when raising their outlook for economic growth this year. But the minutes generally showed that the Fed was increasingly worried about the state of the inflation battle, which at the beginning of the year seemed to be a sure win.

"Participants noted that there were indicators of strong economic momentum, but inflation readings in recent months have been disappointing," the minutes said, while reiterating that they needed greater confidence that inflation was continuing to slow before cutting interest rates.

Interest rate futures show that the probability of the Fed keeping interest rates unchanged in May is 96.8%, the probability of keeping interest rates unchanged in June has risen to 81.1%, the probability of keeping interest rates unchanged in July has risen to 55.1%, and the probability of cutting interest rates in September Only 68.6%.

Tensions remain high in the Middle East - three sons of Hamas leader killed in airstrike

It was reported on the 10th local time that three sons and several grandsons of Palestinian Islamic Resistance Movement (Hamas) Politburo leader Ismail Haniyeh were killed in Israeli attacks on the Gaza Strip.

According to a statement issued by the Hamas Media Office on the 10th, Haniyeh's three sons and several grandchildren were killed in the Israeli attack on the Shati refugee camp in Gaza City.

Haniyeh told Al Jazeera that his son and grandchildren were killed when they were hit by a missile fired from an Israeli drone while driving to visit relatives during Eid al-Fitr. Nearly 60 of his relatives have been killed in the conflict.

Haniyeh called the attack on his relatives evidence of Israel's "failure" and would not change Hamas's position on ceasefire talks in the Gaza Strip.

The Israeli military confirmed the attack, saying the three sons were agents of the armed wing of Hamas.

A joint statement issued on the 10th local time stated that on that day, Israeli Air Force aircraft attacked and eliminated three Palestinian Islamic Resistance Movement (Hamas) militants who were "carrying out terrorist activities" in the central Gaza Strip.

The Israel Defense Forces confirmed that the three militants were the sons of Hamas Politburo leader Ismail Haniyeh.

Outlook

On this trading day, you need to keep an eye on the performance of China's March CPI data, pay attention to the European Central Bank's interest rate decision, pay attention to the changes in the number of initial jobless claims in the United States and the performance of March PPI data, pay attention to the speeches of Federal Reserve officials, and pay attention to news related to the geopolitical situation in the Middle East.

At present, before the situation in the Middle East deteriorates further, there is nearly half the risk of a correction in gold prices, focusing on support near 2320 and 2300 respectively. However, considering that concerns about the geopolitical situation still exist, gold prices are expected to be supported by bargain hunting, which will Limit the short-term decline of gold prices, and be wary of the possibility of a back-and-forth between long and short during the session.