Gold Jumps Over 2% as US Inflation Edges Higher in September

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Principal Points:

• Gold prices rally more than 2% on Wednesday as investors seek safety ahead of uncertainty
• Fresh data from the US showed inflation remained well above 5% in September

What’s Moving in the Markets?

Gold prices rallied on Wednesday and remained near their highs on Thursday after higher-than-expected inflation data from the US. That said, the price of the precious metal surged over 2% to reach a one-month high of $1,796 per ounce.

Traders and investors flocked to the safe-haven commodity after the US reported consumer prices in September stayed elevated. In other words, the latest CPI report, a gauge of inflation, landed at a 5.4% annual rate last month. The figure was higher than August’s 5.3% jump in prices.

Against that backdrop, market participants increased their selling of US dollars, while stocks endured a choppy regular session. On that front, the greenback slipped against major counterparts, including the euro, the British sterling and the Swiss franc.

In the meantime, Wall Street’s S&P500 managed to break a losing streak of three straight days. After a drop in the initial hours, the broader benchmark advanced despite the hot inflation print.

What Are Traders Following Right Now?

Bitcoin, the leading cryptocurrency, reached a new monthly high early Thursday. The token jumped to a session peak of $58,500 amid increased hopes the prospects for crypto remain bright. Adding to the positive developments over the industry, the US overtook the number one spot as the biggest source of bitcoin mining.

Lately, the financial market has been receiving mixed signals from the global economy. In the US, in particular, higher inflation is already expected to stay for longer than predicted. This was confirmed even in the latest Federal Reserve meeting summary.

In more detail, Fed officials released their meeting minutes on Wednesday. A number of policymakers highlighted concerns that inflation pressures could remain well into next year. In addition, the summary contained fresh updates regarding the scaling back of the extraordinary monetary support.

On that note, the Fed has agreed to start reversing the easy-money stimulus next month. Furthermore, they will be reducing the $120bn in monthly bond-buying by $15bn a month. The US central bank expects to be finished with the withdrawal by mid-2022.

What to Watch in the Markets?

As the fourth quarter season moves further, the earnings reporting is gaining traction. To this end, investors will be watching the upcoming financial reports from major corporations in America.

More precisely, investment banks are lined up to report earnings today. These include Bank of America, Wells Fargo, Morgan Stanley, and Citigroup. Additionally, Domino’s Pizza will also deliver its third-quarter performance on Thursday.

Economic Data Coming Up Today (EST times)

On the economic data front, market participants will be watching for the latest jobless claims report. A proxy for layoffs, jobless claims show how many Americans applied for first-time unemployment benefits over the past week. The report is slated for release at 08:30 am.

Also, the producer price index (PPI) will be published at the same time. The PPI numbers indicate the change in the price of goods sold by manufacturers. It is also a way to measure inflation.