The financial markets are currently in the process of factoring in or getting in front of the upcoming release of the core PCE (Personal Consumption Expenditures) report. On Friday the Bureau of Economic Analysis (BEA) will release the most current information on inflation for December.

Market Committee meeting for the calendar year 2023. But before Federal Reserve officials meet for the first time this year on Friday, January 27 the government will release its latest data on inflation vis-à-vis the core PCE for December.

Gold futures traded marginally higher as market participants focus on next week’s FOMC meeting. As of 4:00 PM EST, the most active February contract of gold futures is up $3.80 and fixed at $1932. Silver futures traded under pressure with the most active March contract currently down $0.37 and fixed at $23.565.

Federal Reserve officials are anything but quiet before the 10-day blackout period that occurs just before an FOMC meeting. The first FOMC meeting of the year will begin on Tuesday, January 31, and conclude on Wednesday, February 1.

The financial markets echoed the uncertainty of market participants which caused a decline in US equities today, and strong gains in gold as a safe-haven play. This was certainly a day in which investors sought safe-haven assets while simultaneously avoiding the intrinsic risk of US equities.

 “Front-loading” is a process of distributing unevenly, with a greater proportion at the beginning of the process, and James Bullard thinks this should apply to rate hikes.

Gold futures traded to their highest value since April 2022 which led to selling pressure from traders taking profits. Gold traded to an intraday low today of $1906.20 before slightly recovering. As of 3:25 PM EST gold futures based on the most active February contract are currently fixed at $1912.70 after factoring in today’s decline of $9 or -0.47%.

Market participants continue to react to the bullish market sentiment created by yesterday’s CPI report. Inflation came in at 6.5% year-over-year last month, which is the sixth consecutive month that inflation has diminished since the peak of 9.1% in June.

Considering that as recently as June we had the highest level of inflation recorded in the last 40 years today’s CPI report from December was a welcome change as inflation continues to slowly dissipate. Just six months ago overall inflation peaked at an alarming 9.1%. The historical rise in inflation was a long process after coming in at 0.329% in April and 0.118% in May 2020.

It is a given that the potential for inflation to decline in the December report. The assumption that inflation continues to diminish and has for the most part been factored into market pricing., Tomorrow’s Consumer Price Index will occur after the strong and hawkish speech by Chairman Powell delivered yesterday at a central bank conference in Sweden.