The price of gold has hit a new weekly high as traders eagerly anticipate the release of the US Consumer Price Index (CPI) data later today. The XAU/USD pair is showing positive momentum, hovering around $2,520, but traders are cautious and refraining from making big moves before the crucial CPI report.
The outcome of the CPI data will play a significant role in shaping expectations for the Federal Reserve’s potential rate cut at the upcoming policy meeting. This could have a substantial impact on assets like gold, which do not yield dividends.
Investors are also closely monitoring the US presidential debate between Democratic Vice President Kamala Harris and Republican Donald Trump. While the debate may not have an immediate effect on monetary policy, it provides insights into the candidates’ fiscal policies and economic plans, influencing market sentiment and trading positions.
Spot gold is expected to reach $2,529 per ounce if it maintains its current momentum, as noted by Reuters analyst Wang Tao. The outcome of the CPI report at 12:30 p.m. UTC today will be crucial in determining the short-term direction of gold prices.
Euro Stays Steady Amidst US Debates and CPI Anticipation
The Euro (EUR) has been trading sideways in a range of 1.10200–1.10500 as investors await the US CPI report and digest the recent Harris-Trump debates. Market participants are analyzing the economic policies of both candidates to gauge their potential impact on the Eurozone economy.
The Federal Reserve is expected to lower interest rates next week, but there is uncertainty regarding the size of the cut. The EUR/USD pair is likely to remain range-bound until the CPI data release at 12:30 p.m. UTC today. Any surprises in the CPI figures could lead to significant movements in the currency pair.
Japanese Yen Declines on Safe-Haven Flows and Policy Divergence
The Japanese Yen (JPY) weakened against the US Dollar (USD) as traders adjusted their positions ahead of the US CPI data release. Safe-haven flows into the yen have increased following the Harris-Trump debates, leading to a decline in the USD/JPY pair.
The divergence in monetary policy expectations between the Federal Reserve and the Bank of Japan is putting downward pressure on USD/JPY. While the Fed is anticipated to cut rates, the BOJ may consider raising its key rate, strengthening the yen further.
Traders should pay close attention to the US CPI report today, as higher-than-expected figures could push USD/JPY higher, while lower figures may result in a further decline in the pair.
Analysis:
The current market conditions are influenced by the upcoming US CPI data release and the recent Harris-Trump debates. Investors are eagerly awaiting the outcomes of these events to assess their impact on monetary policy and market sentiment. The price of gold, Euro, and Japanese Yen are all expected to experience volatility based on the CPI figures and policy expectations. It is crucial for traders to stay informed and adapt their strategies accordingly to navigate these uncertain times in the financial markets.