The Prayed has broken above the $1,965 an ounce level on the back of March US CPI data. Above-target inflation expectations are set to lift the yellow metal, a less solid fact that core CPI will not change, they report TD Securities strategists.
A more dovish core CPI number spells good news for gold
“Headline inflation jumped to 8.5%. With March US consumer prices rising to the highest since late 1981 and most components showing large year-over-year gains, many gold traders continue to believe that inflation will not be as transitory as policymakers hoped. But at the same time, core CPI has moderated, which likely caused yields on the Treasury curve to slump, lowering real yields.”
“Real rates, a key determinant of gold price levels, may not rise as fast as if core inflation accelerated as fast as the headline.”
“If the stars continue to align for gold, $1,982/oz appears to be within reach in the not too distant future and the yellow metal could test the recent high of $2,070/oz.”
Source: Fx Street
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