USD Strength Pushes Gold Price Lower

  • Gold Price Dips on Strong Inflation Data
  • G7 & FOMC Now in Focus
  • Silver Moves Higher on Industry Demand

It has been a busy end of the week in commodities news as US inflation data was the key focus of yesterday. The US CPI headline number came in higher than expected. This was largely shrugged off by Wall Street but has led to a slight dip in gold prices. These are now below $1900 but already starting to bounce back well despite the return to strength of the Dollar. The G7 Summit will now be the focus of most traders on Friday while they also look ahead to next week’s FOMC meeting. Meanwhile, Silver has managed to trade back higher on the back of strong industrial demand for the versatile precious metal.

Hot Inflation Data Hits Gold

The most important data to come through so far this week were the inflation numbers from the US. Year on Year the CPI data showed a 5% increase in prices. This was above the 4.7%  that analysts had expected, but the market adjusted well and gold prices have already started to rebound very close to $1900.

The main factor behind the move lower was not actually the inflation data itself, but the impact that this has on US Bond yields. They were pushed slightly higher which is a negative move for the safe-haven gold. A fall in the number of jobless claims is another factor although the price has recovered well heading into the weekend.

FOMC Next Important Market Driver

As traders digested the key inflation data, attention now moves to the FOMC meeting next week to gauge the next turn of the market. The US Dollar is staying relatively strong compared to recent levels above 90 on the Dollar Index awaiting any key news to come from the meeting which would also have a strong impact on gold and other precious metals.

Until now, the Fed has remained largely on the sideline when it comes to the inflation question, though the possibility of tapering is still on the minds of many, and any such news of this kind of action would undoubtedly see movement in gold markets more than has been felt in recent weeks.

Silver Looks to Continue Returning Run

As the price of gold dipped down slightly, Silver continued to run back near the $28 mark after falling away a little last week. This bounce continues to be driven by a return to work and largescale shortages not only on the side of silver but with widespread supply chain disruption happening around the world.

Despite the increase in treasury yields in the US, the precious metal continued strongly with many now looking toward $30 and silver in the strong position where it benefits from the reopening trade, but would also revert to its trusted status as more of a safe-haven if inflationary concerns were to take over, or tapering were to cause disruption in the equities market.

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