Daily digest market movers: Gold price drops ahead of US data
- Gold price falls to $2,170, pressured by higher US bond yields and firm US Dollar amid uncertainty ahead of the United States PPI and Retail Sales data for February.
- Annual core PPI, which strips off volatile food and energy prices, is forecasted to have softened to 1.9% from 2.0% in January. The monthly underlying inflation data is projected to have grown at a slower pace of 0.2% against the prior reading of 0.5%.
- For headline figures, economists expect that the monthly PPI rose at a steady pace of 0.3%. The annual PPI is anticipated to have accelerated to 1.1% from 0.9% in January. The PPI data shows the pace at which producers have increased or decreased prices of goods and services at factory gates.
- Meanwhile, the US Census Bureau is expected to show that monthly Retail Sales data grew by 0.8% after contracting at the same pace in January. It is expected that robust demand for automobiles and higher sales at gasoline stations boosted Retail Sales. Investors closely track the Retail Sales data to get insights into household spending, one of the main growth drivers of the US economy.
- Hot PPI and Retail Sales data would indicate a stubborn inflation outlook, which will allow Federal Reserve policymakers to hold interest rates higher for a longer period. This will improve the US Dollar’s appeal, weighing on Gold. On the contrary, soft figures would signal easing inflation pressures, increasing expectations for the Federal Reserve (Fed) to reduce interest rates in the June policy meeting.
- The CME FedWatch tool shows that chances for a rate cut in June have slightly improved to 69%, from the 65% registered after the release of the stubborn CPI data.
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