Gold (XAU) Daily Forecast: XAU/USD Up 0.06% – Target $2379 on Weaker USD?

Upcoming Economic Data Releases

Later today, on Wednesday, the US Consumer Price Index (CPI) for April will be released, providing insights into the timing of the Fed’s initial rate adjustment. Additionally, the April Retail Sales data will offer a look into consumer spending trends.

Hotter-than-expected inflation data could lead the Fed to adopt a more aggressive stance, boosting the USD and potentially exerting selling pressure on USD-denominated gold.

US Producer Price Index Impact

The US Producer Price Index (PPI) rose 2.2% year-over-year in April, compared to a 1.8% increase in March, aligning with expectations. The Core PPI jumped 2.4% year-over-year, up from 2.1% in March

On a monthly basis, both the PPI and Core PPI rose 0.5% in April. Fed Chair Jerome Powell noted that inflation is decreasing slower than expected, justifying the need to keep rates higher for longer.

He added that further rate hikes might not be necessary. Kansas City Fed President Jeffrey Schmid also highlighted that inflation remains too high, indicating more work for the US central bank.

Consumer Price Index and Retail Sales Outlook

The annual headline CPI inflation is expected to ease to 3.4% in April from 3.5% in the previous estimates. Core CPI inflation is projected to drop to 3.6% from 3.8% in March.

US Retail Sales are expected to decline to 0.4% month-over-month in April from 0.7% in the preliminary reading. According to the CME’s FedWatch Tool, financial markets are pricing in nearly 65% odds of a Fed rate cut by September 2024.

Global Gold Demand Trends

Global gold demand rose by 3% to 1,238 metric tons, marking the strongest first quarter since 2016, according to the World Gold Council’s Q1 2024 report. This increase underscores the continuing appeal of gold as a safe-haven asset.