US Inflation comes in at 3.5% and Gold Still Holds Strong

CPI rises to 3.5%, influencing gold prices amidst U.S. rate and job market dynamics, with global factors bolstering gold’s longer term appeal.

NEW YORK, NEW YORK, USA, April 10, 2024 /EINPresswire.com/ — Today at 8:30 AM EST, the U.S. Bureau of Labor Statistics released the March Consumer Price Index (CPI) at 3.5% (https://www.bls.gov/news.release/cpi.nr0.htm). This slightly surpassed the market expected forecast of 3.4% and represents an increase from February’s 3.2%. Crucially, the core inflation rate, that excludes volatile sectors of food and energy and a key metric for the Federal Reserve hit 3.8%, against a market expectation of 3.7%.

Core inflation is considered a more precise measure of inflation’s actual trajectory, which is unaffected by the volatile prices of food (which rose 2.2%) and energy (which rose 2.1%). Oil prices have surged 4.13% in March.

This latest CPI showing an increase in inflation, could prompt the Federal Reserve to further reduce the probability of imminent interest rate reductions. The market priced the the probability of a rate cut on 12 June to 49% down from 57% a week ago (Reuters), however with these latest figures it may be further reduced. Typically, holding interest rates at its currently high level of 5.5% for a prolonged term will continue to bolster the dollar, rendering dollar-denominated assets like gold more expensive for holders of other currencies, which could dampen demand for gold.

Traditionally, the value of gold tends to decline when the dollar strengthens, yet recent patterns have deviated from this expectation. The 5 April labour report showcased a notable employment surge, with job growth at 256,000 in January, 270,000 in February, and 330,000 in March, highlighting a robust U.S. job market Before the release of this payroll data, gold was trading at approximately $2,290. In the immediate aftermath of the announcement, gold prices dipped to $2,280, but this decline was fleeting. Gold swiftly rebounded, closing the day significantly higher at $2,329.57, marking a near $40 increase.

Prior to the release of the CPI, gold was valued at around $2,350. However, an hour after the release, it experienced a $20 decrease to around $2,330, yet continued to demonstrate robust support. This trend challenges the traditional view that gold’s value inversely correlates with the U.S. economy’s strength, indicating other factors at play.

Key among these factors are geopolitical tensions, including the ongoing unrest in the Middle East, which contributes to global unease. Another key significant driver of gold prices has been the ongoing demand from central banks, notably The People’s Bank of China (PBoC), India and Turkey also continue boosting their gold reserves. The World Gold Council noted that the PBoC purchased 225 tonnes of gold in 2023, the highest annual addition since 1977. Reuters reported that the bank continued its purchases for the 17th consecutive month in March, adding 160,000 ounces, bringing its reserves to 72.74 million troy ounces. Capital Economics, also stated that there was a lot of evidence of exceptionally strong buying from Chinese households. Sanctions on Russia and national security concerns have prompted central banks around the world to bolster their gold reserves and reduce their dependence on the US dollar.

Paul Kohli, BSc FCA of The Academy for Professional Intelligence^® (TAPI^®), Chartered Accountants, stated “That although U.S. interest rates affect gold prices, the complexities of the global market and geopolitical tensions encourage global investors and central banks to view gold as a secure investment in which to continue to grow their reserves.”

David Rosenberg of Rosenberg Research predicts that gold could reach or surpass $3,000, attributing this potential surge to a tight supply and significant underinvestment in gold by large investors. Paul Kohli, an expert in money savings strategies at TAPI^®, has shared insights indicating that US interest rates are anticipated to decrease gradually, aligning with the Federal Reserve’s 2% inflation target. He observed that the UK’s inflation rates are on a decline, suggesting that the elevated US interest rates will achieve their intended outcomes over time. For a more thorough analysis, visit his blog https://professionalintelligence.org/goldsavings-april24

Paul proposes that while gold prices may experience a temporary dip if global tensions diminish and the US economy strengthens, the long-term trajectory appears to be upward. Consequently, adding gold to an investment portfolio can serve as one of the smart ways to save money and preserve wealth in the long term using Professional Intelligence^®. Paul also points out that silver investments are lagging, especially against gold. He mentions the gold-to-silver ratio now at 83 being at one of its record highs, means silver has growth potential as gold prices increase. Gold has increased by more than 18% in the last two months and up 14% in the year.

In the US, Costco’s gold bar sales have surged from $100 million to $200 million monthly, according to Wells Fargo analysts. They offer 1oz bars, nearly 24ct, at approximately 2% above the spot price. In the UK, outlets like Hatton Garden Metals, Atkinsons, and HGM stand out for their competitively priced gold.

Paul Kohli BSc FCA, Principal at The Academy for Professional Intelligence^® (TAPI^®), Chartered Accountants, is a distinguished Chartered Accountant and Registered Auditor, who trained at PricewaterhouseCoopers^®. TAPI^® provides in-depth personal finance training through interactive courses, like the complementary savvy savings blueprint. Participants gain the skills to be their own financial coach. Through the application of effective money management and savings strategies, they can make informed smart financial choices leading to long term financial resilience. Learn more at https://professionalintelligence.org

TAPI^® provides this information for educational purposes only. It is not intended to serve as legal, tax, investment, financial, or professional advice, nor does it endorse any specific financial assets or securities. TAPI^® assumes no liability for any inaccuracies, oversights, or losses resulting from the utilization of this information.

Paul Kohli BSc FCA
The Academy for Professional Intelligence® (TAPI®)
[email protected]
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