Gold has edged higher in the Tuesday session. In North American trade, the spot price for an ounce of gold is $1326.52, up 0.27% on the day. In economic news, CPI and Core CPI both slowed to 0.2%. On Wednesday, the US releases key inflation and consumer spending reports, so we could see stronger movement in gold prices.
In the US, CPI dropped from 0.5% to 0.2%, and Core CPI edged lower to 0.2%, down from 0.3%. Lower inflation could have a significant impact on the Federal Reserve’s monetary policy. if inflation does not move upwards, the Fed could maintain its projection of three rate hikes in 2018. If, however, inflation moves closer to Fed’s inflation target of 2 percent, there is a stronger likelihood of four rate hikes this year.
The markets are keeping a close eye on the Federal Reserve, which holds its next policy meeting next week. The Fed is widely expected to raise rates for the first time this year at that meeting, but the real question is how many hikes we’ll see in 2018. The Fed projection remains at three rate hikes, but strong economic data could push the Fed to raise its forecast. Higher US interest rates makes the greenback more attractive to investors, so the number of rate hikes could have a strong impact on gold prices, which tend to move inversely with interest rate levels.