Gold Tanks as US Inflation Shows No Signs of Stopping

By Peter Bukov|

Published: September 13 2022, 13:24 GMT+0

Gold Tanks as US Inflation Shows No Signs of Stopping

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The bullion cratered 1.5% immediately after US inflation data, which showed that inflation in the US is nowhere close to stopping.

US inflation surprises to the upside

In August, the annualized headline US Consumer Price Index (CPI) fell to 8.3% from the projected 8.1% and 8.5% in July.

US consumer inflation increased by 0.1% on a monthly basis, beating the -0.1% forecast and the 0% before. That is the 27th straight month of rising inflation.

The core number was 0.6% MoM as opposed to the 0.3% anticipated and 0.3% last. YoY core CPI increased to 6.3% as opposed to the projected 6.1% and the 5.9% booked in July.

After the data, metals, stocks, and bonds plunged sharply, while the USD soared. Consequently, STIRs are now pricing in a 20% chance of a 100bps Fed Hike next week, while November is now pricing a 50% chance of a 75bps hike, and December is pricing a 25% chance of a 50bps hike.

Chart remains bearish

It looks like the current cycle lows near 1,680/90 USD might be broken today, destroying stop-losses of long positions and likely sending gold further lower, targeting 1,650 USD in the initial reaction.

Alternatively, gold must jump back above 1,710 USD to cancel the immediate bearish pressure before attacking the long-term downtrend line near 1,730 USD.