The gold price rose slightly towards 1,945 on Monday, bolstered by safe-haven demand as both the U.S. dollar and Treasury yields declined ahead of today’s release of the U.S. inflation data for October.
Possible effects for traders
According to a Reuters survey, economists expect the headline U.S. Consumer Price Index (CPI) to slow down from a 0.4% rise in September to a 0.1% increase in October. The core inflation rate is expected to remain steady at 0.3%. While gold is considered a protection against inflation, rising interest rates increase the opportunity cost of owning the metal.
XAUUSD was declining during Asian and early European trading sessions. Today, traders should focus on the U.S. CPI report at 1:30 p.m. UTC. If inflation exceeds expectations, the chances for another rate hike by year’s end rise, potentially boosting the U.S. dollar, so the short-term bearish trend in gold might continue. Meanwhile, lower-than-expected figures may push XAUUSD towards 1,950.