Market participants await the November CPI inflation numbers

Washington (Dec 10) Today the U.S. Bureau of Labor Statistics will release the inflationary numbers vis-à-vis the CPI index. This report will be a critical component that the Federal Reserve will review before releasing its adjusted monetary policy. On Wednesday of next week, the Federal Reserve will release the statement including the revised dot plot and a press conference by Chairman Jerome Powell.

Bob Haberkorn, senior market strategist at RJO Futures said, “The stronger-than-expected jobless claims numbers along with a firmer dollar are pulling down on gold, but there are also traders waiting for the CPI data. If inflation numbers are going to be high, then gold will bounce right back up and make a move towards $1,800.”

Inflationary pressures have been spiraling out of control for months. Inflation rates edged higher beginning in June when the CPI came in at 5.4%. Inflation remained right around this level in July, August, and September. However, that all changed in October when the CPI projections indicated a major uptick to 5.8%. But the actual numbers came in well over the projections at 6.2%, the first occurrence of inflationary pressures at this level since November 1990.

Up until October the Federal Reserve maintained an adjusted mandate to let inflationary pressures run hot in place of maximum employment. They based their assumption on the belief that the current inflationary pressures will be transitory and will quickly move back down to acceptable levels.

Recently Chairman Powell acknowledged that that assumption was incorrect by removing the word transitory from the Fed’s vocabulary. However, his explanation was the whole truth, when he said we would remove the word transitory because “transitory means different things to different people.”

KitcoNews