Spot gold prices are up 1.1% at around $4,414.63 per ounce, as market watchers eye US inflation data due out this afternoon.
The July inflation data is expected to shed some light on the Federal Reserve’s policy path and provide some further clarity over whether they could expect a rate hike next month.
US CPI figures for July are expected at 1:30pm BST.
Saxo UK investor strategist Neil Wilson says:
A hot print will present Fed chair Kevin Warsh with an early test of his mettle - will he follow up those tough words on inflation with action, or continue to lean on jawboning the market and higher bond yields due to oil/inflation dynamics?
I continue to think the Fed will have to follow through with at least one hike this year as it remains short on the inflation side of its mandate, and it shouldn’t have to worry too much about the employment side, despite those apparently weak payrolls numbers.
Anything up to +0.2% for core and headline suggest inflation trimming back down, which pushes out the odds of a September rate hike in all likelihood and keeps the momentum in the stock market with the bulls after back-to-back days of losses for the S&P 500 in the wake of last week’s rally.
Anything above that presses the case for the Fed to move on inflation next month with deeds, not words.
