13 May 2021

CPI Index Highest Since 2008 As Gold Rises $9

The gold price is up $9/oz on Thursday, as markets decide what happens after the release of the U.S inflation data. Gold slowly started to recover from Thursday as the U.S Dollar Index fell 0.25% to signal a gain of 0.88% from the gold price low. As inflation rises, real rates will hurt bond and equity investors. This places gold in a favorable position as the safe-haven alternative. 
The U.S Bureau of Labor Statistics released the Consumer Price Index changes this week, which shows an increase of 4.2% from a year ago – the highest since 2008. Vice chair of the Federal Reserve, Richard Clarida, admitted on Wednesday that the inflation report and the job growth foiled their expectations, labeling it as the “biggest miss in history.” 
Larry Summers, former director of the National Economic Council for President Obama, wrote in an article for The Washington Post last month on the topic of inflation. He warned, ‘while there are enormous uncertainties, there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.’  
The yellow metal was last seen trading at $1,824/oz. 

Jaco Lups