Core CPI Surprise Keeps Fed Hike Odds Alive for Gold
The August core CPI report released on Friday morning had a significant impact on gold and silver prices, keeping the Federal Reserve's rate hike decision tilted towards another increase. At the time of writing, spot gold was trading near $4,377.40 an ounce, up 1.38%, while spot silver was trading at $64.945, up 2.12% on the session.
The core CPI rose 0.3% on the month, above forecasts for a 0.2% gain, while the annual core rate eased only to 2.4% from 2.5%. This development keeps the higher-for-longer trade alive and has resulted in a reluctant trader sentiment against fading the Fed hike odds.
Gold is trading as a rates-and-dollar market, not as a clean haven, and its price broke above the $4,341.10 200-day EMA reference after testing the lower end of the $4,315 to $4,288 support zone. Silver is now outperforming gold after earlier losing the $65.60 to $65.718 moving-average band and breaking below $63.31.
The geopolitical bid is still present in the market, but the near-term driver is the real-rate channel into next week's Fed decision. The Strait of Hormuz remains a key geopolitical channel into oil, inflation expectations, and defensive demand.