Gold Investors Wait for Tomorrow’s CPI Report for April

Gold Prices Stabilize and Begin to Rebound After Last Week’s Jobs Report Shock

Gold pricing has been rising ever since last Friday’s strong jobs report resulted in prices plunging $34 from its open to the close. Last Thursday gold futures traded to an intraday high of $2085. However, gold closed well off of that high settling at $2055 per ounce. The following day gold opened just above Thursday’s close at approximately $2057 and after dropping $34 closed at $2024.

On Monday gold futures closed with modest gains, closing at $2033. Today gold opened at $2028.40 a few dollars above today’s low of $2026.40 and as of 4:40 PM EDT is currently up $9.10 or 0.45% and fixed at $2042.30. One interesting aspect of gains over the last two days is that on both days’ gold scored moderate gains in conjunction with dollar strength. The dollar is currently up 0.27% with the index fixed at 101.43.

CPI Report, Government Debt and Banking Crisis in Focus

Market participants are acutely focused on tomorrow’s Consumer Price Index report. However, investors will simply add tomorrow’s report to their ongoing concern regarding potential economic catastrophes. These include the banking and debt ceiling crises.

Recent information indicates that regional banks across the United States have experienced a tremendously high level of losses. The debt crisis is far from being resolved. Although the president is meeting with members of the Congress and Senate it is widely believed that no real progress will be made based on the division between Democratic and Republican legislators. The president began the meeting with a statement expressing he does not expect much out of this meeting saying, “We’re not going to take any questions now. We’re going to get started, and we’re going to solve all the world’s problems.”

President Biden today mentioned that he has been thinking about invoking the 14th amendment as an option for resolving the debt ceiling impasse. Section 4 of the 14^th Amendment says, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

It seems as though the banking crisis continues to worsen, and resolving the debt ceiling is far from being resolved dampening any real impact on tomorrow’s CPI report.

Assessing the Potential Impact of Tomorrow’s CPI Report on Gold Prices

The opinions on tomorrow’s CPI report vary with any outcome resulting in higher gold prices. As reported by MarketWatch, Andrew Schrage, chief executive officer at Money Crashers said, “If those readings come in hot this month, we could see another push toward record highs” and Lukman Otunuga, manager, of market analysis at FXTM said, “signs of cooling inflation could inject gold bulls with renewed confidence, propelling prices back toward this year’s high”.

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Wishing you as always good trading,
Gary S. Wagner