If you’re a regular Gold Bullion Bulletin reader, you’ll know that gold prices are expected to reach new highs by the end of the year. This objective could soon be even easier to achieve as expectations mount that the Federal Reserve will soon announce an end to its punishing rate hikes program. While this news further strengthens consensus that gold prices will set a new record high within the next few months, it also builds a sense of urgency if you haven’t yet taken advantage of the recent windows to buy.
The reason for optimism came on Thursday in the form of yet more encouraging inflation data. The latest figures confirm that we’re finally starting to see inflation decline. June’s U.S. Consumer Price Index showed a very modest 0.2% monthly increase and 3% annual increase – the smallest annual rise in prices since 2021. Economists had expected a 0.3% monthly rise and 3.1% annual increase.
These figures have renewed hope that the Federal Reserve will be able to end its rate hikes policy – something that is largely expected to see the gold bulls released and running towards all-time highs.
FWDBONDS’ chief economist Chris Rupkey says these figures are hugely encouraging. “Headline inflation is plunging for consumers. CPI inflation peaked at 9.1% year-on-year last June 2022 and today it is at a new low for the year at 3% year-on-year. The economy is on a safer path today as victory over inflation is in the air,” he said. “Even core inflation is down in the dumps with a 0.2% rise which is the softest print since August 2021.”
Oxford Economics’ chief US economist Ryan Sweet said the Feds could now find themselves in a position of needing to backpaddle on recent reports indicating at least two more rate hikes are on the table. “The Fed has painted itself into a corner as Fed officials’ communication has signalled that another rate hike this month is essentially a slam dunk,” he commented. “However, the new data could give the Fed reason to debate whether any further rate hikes after this month are needed.”
deVere Group’s Nigel Green said the latest inflation data is a best-case scenario moment for markets. “The U.S. CPI data raises hopes that the Federal Reserve is going to be able to bring down inflation without steering the U.S. economy into a recession. The battle on rising prices is being won, as the data suggests, meaning the pressure is off the Fed for future rate hikes.”
While this news could light a fire under gold prices, the U.S. dollar by contrast fell 1%, again confirming signs of weakness and making gold even more attractive to investors. There is no time to wait. Take action today. Buy gold now.
