The gold market continues to face many challenges as prices remain around the resistance zone of 4,700 USD/ounce, in the context of inflation in the US showing signs of maintaining at a high level and increasing attention to the monetary policy orientation of the US Federal Reserve (Fed).
According to data released by the US Bureau of Labor Statistics (BLS) on Tuesday, the consumer price index (CPI) in April increased by 0.6% after increasing by 0.9% in March. This increase is consistent with market forecasts.
In 12 months, total inflation increased to 3.8%, significantly higher than the 3.3% of the previous month and also exceeding the forecast of 3.7% of economists.
Meanwhile, core CPI excluding food and energy prices increased by 0.4% in April, higher than the 0.2% of the previous month. This data also exceeded the consensual forecast by 0.3%.
Year-on-year, core inflation increased to 2.8% compared to 2.6% recorded in March.
Although inflation data adds pressure on the gold market, this precious metal still maintains around the important resistance zone in the initial reaction after the latest economic report. The nearest spot gold price traded around 4,703.20 USD/ounce, down 0.66% in the day.
According to analysts, gold still maintains a relatively stable state as the market is increasingly concerned about the risk of the US economy facing slow growth while inflation remains high.
The latest inflation data also makes the market increasing expectations that the Fed will continue to maintain a cautious monetary policy in the near future. However, many experts believe that raising interest rates too sharply could create more pressure on the economy that is showing signs of slowing down.
Analysts say that inflationary pressure is mainly coming from supply factors, while monetary policy can hardly solve these problems quickly.
According to reports, energy prices continue to be the biggest contributor to the increase in consumer spending. Conflicts in Iran have caused significant disruptions to the global energy market and pushed oil prices up sharply.
The energy price index increased by 3.8% last month and accounted for more than 40% of the CPI increase. Year-on-year, energy prices have increased by 17.9%.
Mr. Chris Zaccarelli - Investment Director at Northlight Asset Management - said that in the context of increasing inflationary pressure, the Fed is likely to maintain current interest rates for the rest of the year.
Inflation has not shown clear signs of cooling down while the labor market continues to stabilize. This makes the possibility of the Fed early cutting interest rates lower," he said.
