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On December 9th, Reserve Bank of Australia (RBA) Governor Bullock emphasized at a press conference that inflation risks are skewed to the upside, noting that inflation and employment data will be crucial for the February meeting. Regarding this meeting, Bullock stated that the possibility of a rate hike or a rate cut has not been explicitly considered, but the possibility of tightening policy has been discussed. However, Bullock said that if inflation remains persistently high, the RBA may need to consider raising interest rates. Regarding future interest rate trends, Bullock expressed a data-driven approach, making decisions at each meeting. Bullock said, "We will not make predictions about the timeline for future actions; we will decide at each meeting."Reserve Bank of Australia Governor Bullock: The committee will take all necessary measures to reduce inflation.Reserve Bank of Australia Governor Bullock: Its inappropriate to react based on a single data point. The committees focus is now more on inflation, and they are wary that if inflation remains high, they may have to take measures.Reserve Bank of Australia Governor Bullock: This is a difficult situation. Our current position is broadly balanced, perhaps somewhat tightening, with financial conditions possibly neutral or slightly tight, and we must be very cautious.Reserve Bank of Australia Governor Bullock: With interest rates nearing neutral and the economy and employment trending towards equilibrium, the situation is becoming more difficult to predict.

Gold Price Prediction: XAU / USD will continue to fluctuate above $1,900 despite a decline in US Inflation

Daniel Rogers

Mar 15, 2023 11:43

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Gold price (XAU / USD) is not in danger despite U.S. inflation figures meeting expectations. Since Monday, the precious metal has been fluctuating continuously between $1,895 and $1,913. The release of the US Consumer Price Index (CPI) failed to produce a significant reaction in the Gold price; however, the upside bias appears to be solidified as wagers on lesser rate increases from the Federal Reserve (Fed) have increased.

 

The US Dollar Index (DXY) is protecting the critical support at 103.50, but it appears vulnerable to further losses as investors' risk appetite has dramatically increased. As market participants purchased S&P500 futures in response to higher odds of a smaller rate hike from Fed chair Jerome Powell, a likely recession in the US economy was postponed, signaling an uptick in optimism.

 

Contrary to the risk-on sentiment, demand for US Treasury bonds remained weak, causing 10-year US Treasury yields to rise above 3.68 percent.

 

The headline As anticipated, the US CPI increased by 0.4% on a monthly basis, and the annual figure decreased from 6.4% to 6.0%. In addition, the core CPI, which excludes crude and food prices, decreased to 5.5% from 5.6% previously. The Fed appears to be pleased with the persistence of a declining trend in US inflation.

 

In the future, investors will closely monitor the US Retail Sales (Feb) data. Monthly Retail Sales data is anticipated to decline by 0.3% compared to the previous release of a 3.0% increase. This indicates that the consumer spending rebound is over and the Fed is on course to achieve its inflation target of 2%.

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