Next week the Federal Reserve will begin its sixth Federal Open Market Committee (FOMC) meeting this year. The Federal Reserve convenes and holds its FOMC meetings eight times per calendar year. It is during these meetings that Federal Reserve members discuss their economic projections and vote on any changes it will implement regarding their monetary policy such as rate hikes or cuts.

Like a one-two punch, yesterday’s CPI report combined with today’s PPI report suggests that inflation is and will remain persistent. Specifically rises in wholesale prices will be passed down the consumer chain. This implies that the level of inflation is likely to remain elevated well into next year.

The CPI (Consumer Price Index) was released this morning, and predictions that headline inflation had risen by 0.6% last month forecasted by economists polled at the Wall Street Journal were spot on. Last month inflation had its largest month-over-month gain this year.

Market participants are waiting for the CPI (Consumer Price Index) report which will be released tomorrow. According to economists polled by the Wall Street Journal, the report will reveal that headline inflation increased by 0.6% last month. If their predictions are correct this would be the largest increase since June 2022. This would take inflation from 3.2% in July to 3.6% last month.

Gold futures opened at $1943.80 then rose to $1954 in one hour beginning at 9 o’clock EDT. This rise was not sustainable with gold giving back those gains and trading to a low of $1940 before slightly recovering. As of 5 PM EDT gold futures basis the most active December contract is currently fixed at $1942.60 which is a net gain of $0.10.

Back at the beginning of 2022, the dollar index fell to a low at around 99 points. After hitting those lows, the dollar entered a trend with an upward trajectory which concluded at a recent record high just above 114 points on September 28, 2022. The dollar index traded lower from the highs of 114 points correcting for 10 months when on July 18, 2023, it hit an intraday low of 99.14.

Not sprouting from within the U.S. but rather overseas, deep concerns regarding the economic slowdown in China and the eurozone have resulted in a sizable jump in yields of global bonds. Higher yields strengthened the dollar which in turn moved both gold and silver pricing lower. This is because the precious metals are paired against the dollar.

Gold futures had a respectable gain this week opening on Monday at approximately $1944, and today closing at approximately $1966. The weekly trading activity resulted in a gain of approximately $22. But most significant is that this week’s price gain follows the prior week's gains.

Persistent

pər-ˈsi-stənt    ADJECTIVE

1. existing for a long or longer than usual time or continuously: such as

retained beyond the usual period.