Gold price looks puzzled ahead of awaited US inflation data

Despite caution ahead of US CPI, the gold price rises as the US dollar corrects to US CPI. The imminent release of the Consumer Price Index (CPI) statistics for the United States on Thursday has encouraged the gold price to try to recover. The impact of a slowdown in business hiring is somewhat mitigated by sticky wage growth and a lower unemployment rate, which is why the precious metal earlier fails to make a definitive move.

The US Dollar Index exhibits tenacity as rising international oil prices support continued US inflation. Additionally, the US Dollar is supported by hawkish remarks from Fed policymaker Raphael Bostic to stave off a slowdown in hiring. JP Morgan has increased its outlook for the US economy, which might help the US Dollar gain further momentum.

Gold is trading at $1932.48 at the time of writing, earlier on the day the precious metal bounced back to $1,940.00 as investors remained cautious ahead of US inflation data. Mixed Nonfarm Payrolls (NFP) data for July showed a fresh addition of 187K payrolls in July, the lowest figure since December 2020.

The unemployment rate dropped to 3.5%, while wage growth remained stable. The monthly labor cost index maintained its growth pace of 0.4%, while investors anticipated a decline in economic data to 0.3%. Annual economic data also remained stable at 4.4% against expectations of 4.2%. Sustained wage growth would keep inflationary pressures elevated and might force the Fed to raise interest rates further.

Atlanta Fed Bank President Raphael Bostic said that July’s employment remains in line with expectations and that the central bank will keep interest rate policy restrictive in 2024. The US Dollar Index rebounded after defending the bearish impact of steady payrolls report, and Fed Governor Michelle Bowman said that the central bank will raise interest rates further to bring inflation down.

JP Morgan is confident that the US economy will not enter into a recession and raises the real annualized GDP growth forecast for the July-September quarter to 2.5% from 0.5%.