Oct 14, 2022
VOT Research Desk
Yellow metal declines and is still exposed. The US dollar is expected to benefit from the possibility of yet another massive 75 bps rate rise at the November FOMC meeting, according to economists at TD Securities.
Everywhere there is deflation but in the CPI figures. This is the story that is being told as a result of the abrupt change in risk sentiment that occurred after the hot inflation print.
It admits that the disinflation seen in real-time rent data has a considerable lead period due to the rising shelter components of inflation.
This however ignores the fact that private rents have been declining for some months and that the relief in private rents is only expected to be reflected in the CPI statistics by the second half of 2019.When essential services are excluded; inflation printed a new post-covid high and is still on the rise.
The rebound in risk assets and precious metals, on the other hand, may instead be a sign of market illiquidity, which has negative repercussions.
For the short squeeze to continue, gold prices still need to raise over $1,730. Gold prices will require continuing dollar strength to set a new low, though, since markets have already fully priced in a 75 basis point raise for the upcoming FOMC meeting.
