Gold has been flat this week and just holding above $1760 support.The US CPI report could get gold moving.
- If US CPI is a miss and comes in below 5.5% then watch for some gold upside. That may question how fast the Fed needs to go on a faster taper.
- If US CPI comes in closer to 7% then anticipate further gold downside. The fears will be that high inflation will force the Fed's hands and that could result in a flattening of the yield curve. A stronger USD in the near term alongside rising yields should push real yields higher and gold lower.
The key here is how interest rate expectations are impacted by the CPI print. At present there are three hikes priced in for the Fed next year.
