All eyes on inflation data for clues on gold's next big move. What’s next?

New York (April 27) This year, inflation has surged at its fastest pace in 41 years and shows no signs of slowing down anytime soon.

Data released this month, showed Consumer Price Inflation in the U.S surged to a new four-decade high of 8.5% in March – its largest annual increase since December 1981 and a significant jump from the 7.9% Inflation rate reported in February.

After spending the whole of 2021, pushing the narrative that surging inflation was only transitory and nothing to worry about – belatedly now, the Fed has decided to swing into action. At its policy meeting in March, Fed officials announced that they would raise interest rates 'aggressively' this year, setting the economy up for one of its steepest tightening cycles in a quarter of a century.

Just how aggressively the Fed will raise rates could ultimately be determined by the central bank’s favourite measure of inflation – Personal Consumption Expenditures (PCE) data.

The reading is expected to top forecasts again for another straight month in a row, which could force the Fed to hike rates by 50 to 75 basis points at their next policy meeting on May 4-5.

Right now, Gold prices are trading sideways in a tight range, which ultimately indicates a big move is on the horizon. The only question now, is which way.

FXStreet