Analysis of the scenario of US inflation surpassing a record of 8% and the impact on gold prices

The gold market will pay special attention to US inflation data next week. During the week, there are many new economic data to be released. Analysts are predicting that price pressure will reach the highest level in four decades, with US inflation surpassing 8% in March 2022.

Last week, the gold market received important macroeconomic information as well as the minutes of the Fed’s Open Market Committee (FOMC) meeting in March 2022 as well as the Fed’s plan regarding the Narrow balance sheet is estimated at 95 billion USD, this program is expected to be launched in May 2022.

The Fed has discussed raising interest rates by 50 basis points in the upcoming meetings, the market has now considered this possibility in May 2022. The majority of market participants believe that adding one or more rate hikes by 50 basis points within the target range would be appropriate in the upcoming meetings, especially if inflationary pressures remain high. or increase.

This explains the US inflation data for March 2022, scheduled to be released on Tuesday, will be one of the extremely important factors to watch. Experts and market participants calculate annual US inflation to be around 8.4% – the highest level in four decades.

Chief economist at ING, Mr. James Knightly, analyzed: “The release of the consumer price index in March 2022 is expected to show that inflation continues to increase sharply due to higher gasoline prices. The US in February 2022 was estimated at 3.50 USD/gallon while by March 2022, this price had risen to 4.19 USD/gallon. Food prices recently increased rapidly while the problems were related to the supply chain, high commodity prices and rising labor costs have not been fully resolved.”

High inflation data will put pressure on the Fed to raise interest rates by 50 basis points in May 2022, However, the market is still not convinced about the possibility that the Fed will maintain tightening monetary policy. strongly throughout 2022. This is the reason why the gold price increased strongly, the price of gold for delivery of futures contracts in June 2022 on the Comex market traded most recently at 1,945.9 USD/ounce, up more than 1% during the week.

OANDA senior market analyst, Edward Moya, told Kitco News: “The market is now focused on whether the Fed will accelerate the tightening of monetary policy, the central bank will be forced to. choosing between continuing to deal with inflation or slowing policy tightening because of growth concerns. This fact provides long-term optimism for gold investors.”

Growth risks will only increase, Moya said. He cited a series of economic data expected to be released in April 2022.

“As the war in Ukraine drags on, it will continue to push up inflationary pressures on the market. There are too many reasons to move money into safe-haven assets. And as yields on US Treasuries rise. high, gold prices may face a pessimistic outlook, gold prices remain firm. We also need to take into account the possibility of additional shocks to the prices of many commodities,” Mr. Moya pointed out.

According to some experts, the support and resistance levels of gold price next week will be 1,920 USD and 1,967 USD/ounce. Mr. Moya considers the threshold of 1,970 USD/ounce as the upper limit and 1,900 USD/ounce as the lower threshold for gold price next week.

Key economic data scheduled for release next week include US CPI on Tuesday; US manufacturing index, China interest rate decision on Wednesday; announcements on ECB interest rate policy, retail sales, first-time US unemployment numbers released on Thursday; Empire State Index of US manufacturing on Friday.

Trung Men