The international gold price rebounded weakly, the U.S. index hit a new high in more than two weeks; focus on a blockbuster data

On Monday (September 13), international gold prices remained stable, but the strengthening of the US dollar limited the room for gold prices to rebound. Investors are cautious before the release of US consumer price data, which may be crucial for the Fed to decide when to start withdrawing asset purchases.

At GMT+8 16:47, spot gold price rose by 0.12% to US$1,789.73 per ounce; the main COMEX gold contract fell by 0.07% to US$1790.9 per ounce; the US dollar index rose by 0.17% to 92.797.


The U.S. dollar index hit a high of 92.880 since August 27, while the price of gold is not far from the low of $1,782.59 per ounce set last week since August 26.

IG Market analyst Kyle Rodda said: "There is a view that if inflation really gets out of control, the Fed will have to control it. This means that the rate of reduction in debt purchases will be faster and interest rates will be raised earlier than expected. This is for gold. That is not a good thing." He added that the price of gold is in the range of US$1760-1830, which reflects the current general hesitation on the epidemic, economic growth, inflation expectations and policies.

Data released last Friday (September 10) showed that the US producer price index rose steadily in August. The data boosted the U.S. 10-year Treasury bond yield. Higher yields mean that the opportunity cost of holding non-interest-bearing asset gold is higher.

OANDA Asia Pacific Senior Market Analyst Jeffrey Halley said in the report: "The global gold market is still seriously under-purchasing. Before the dollar began to weaken, the price of gold did not rebound much, and the decline intensified when the dollar rose." He added that gold needs this week. Retake it and keep it above US$1,800, preferably US$1,830 to ease the tension of the bulls.

All eyes are now on the August Consumer Price Index (CPI) to be announced on Tuesday (September 14), which may show that the core inflation rate has slowed slightly to 4.2%. If the result is higher than expected, it may cause "stagflation" concerns and stimulate the Fed's expectations to turn hawks.

US Cleveland Federal Reserve Chairman Meester said on Friday that despite the weak employment report in August, she still hopes that the Fed will begin to reduce its asset purchase program this year.

Market professionals say that better-than-expected inflation data may accelerate the Fed’s slowing down of plans to buy $120 billion in bonds per month. The reduction of the asset purchase plan will be the Fed's first major move away from the easing policies it has implemented to fight the epidemic.

Peter Boockvar, investment director of Bleakley Advisory Group, said that if the CPI is higher than expected, it may decide whether the Fed will announce a reduction in bond purchases in September or wait until November.

Barclays Bank Chief U.S. Economist Michael Gapen said that the CPI report is expected to show that inflation is peaking, as the Fed said, but the slowdown is not just a problem of consumer spending, but also in corporate spending and housing.