US August Inflation Rebounds, Is $1900 an Important Level for Gold?

The US overall CPI rebounded in August, indicating stubborn inflation and confirming the downward trend for gold.

Last night (Sep 13th), the US Bureau of Labor Statistics released the US CPI data for August, causing gold to decline again, briefly falling below $1910. The data showed that US August CPI increased by 3.7% compared to the previous year, surpassing expectations of 3.6% and exceeding July's 3.2%, marking a second consecutive month of YOY growth rebound.

Additionally, the MOM CPI growth rate rose from 0.2% in July to 0.6%, essentially meeting expectations and representing the largest MOM increase in 14 months. Gasoline prices increased by 10.5% MOM, becoming the main driving factor behind the growth.

Excluding energy and food, the core CPI increased by 4.3% YOY, slightly lower than July's 4.7%, in line with expectations, and the smallest increase in nearly two years. However, the core CPI MOM growth rate increased slightly from 0.2% in July to 0.3%, slightly exceeding the expected value of 0.2%.

Some analysts believe that although the cooling of the core CPI may alleviate pressure on the Federal Reserve to some extent, significant fluctuations in oil prices may force various countries in Europe and America to maintain high interest rates for a longer period of time, potentially raising market expectations for a Fed rate hike in November.

Regarding the impact of the August CPI data on the future prospects of gold, economists at an Australian bank suggest that if the price of gold falls below the $1900 level, it may trigger bearish sentiment in the market. If the Federal Reserve does not release any more unexpectedly negative signals for gold, it may continue to oscillate in the range of $1900 to $1940. If it can break through the recent high point of $1940, it could lead to an increase in bullish sentiment.

In reality, the rebound in US August CPI will likely make the Federal Reserve more inclined to keep the possibility of future rate hikes open. Prolonged high interest rates will provide support for the US dollar and exert downward pressure on gold. The current downward trend for gold may have been confirmed. From a technical perspective, gold has approached around $1906 and is looking to test $1900, followed by $1885.

Source: Mitrade Webtrader