Gold investors are focused on the newly released September Consumer Price Index (CPI) report, a key factor in the Federal Reserve’s next interest-rate decision. The report was expected to show persistent inflationary pressure, which could lead the central bank to maintain its hawkish policy stance.
A higher-than-expected inflation reading typically strengthens the U.S. dollar and bond yields, creating headwinds for gold, which does not pay interest.
Market reaction will depend on the report’s details, particularly core CPI, which excludes volatile food and energy prices. Economists’ consensus forecast was for a 0.6% month-over-month increase. The year-over-year forecast was 3.6%.
A significant deviation from either forecast could trigger volatility in gold (GC=F) and related ETFs, including GLD and IAU, as traders reassess the likely path of interest rates.