Gold Price May Decline as Strong CPI Data Raises Inflation Fears
Gold's price may decline in the short term despite its bullish drivers, including de-dollarization and government intervention in the debt market. According to a recent forecast from LiteFinance, XAU/USD may fall due to strong CPI data. The precious metal's fate hinges on US inflation, with an acceleration expected to lead to selling.
Market expectations are pointing towards two Fed rate hikes, with futures markets raising the implied probability from 49% to 69%. This has led to increased Treasury yields and a risk of accelerating inflation, pushing gold prices lower. Additionally, equity valuations are coming under pressure as investors face a tougher choice between the S&P 500 and debt-market yields.
The release of August US inflation data will determine gold's fate, with an acceleration in inflation leading to selling at market. A target price of $4,170 has been set for a potential reversal into long positions if prices rebound from support at $4,070 per ounce.