Safe-Haven Demand Boosts Gold Ahead of the U.S. Inflation Data
The gold price rose slightly towards 1,945 on Monday, bolstered by safe-haven demand as both the US dollar and Treasury yields declined ahead of today's release of the U.S. inflation data for October.
According to a Reuters survey, economists expect the headline U.S. Consumer Price Index (CPI) to slow down from a 0.4% rise in September to a 0.1% increase in October. The core inflation rate is expected to remain steady at 0.3%. While gold is considered a protection against inflation, rising interest rates increase the opportunity cost of owning the metal.
XAU/USD was declining during Asian and early European trading sessions. Today, traders should focus on the U.S. CPI report at 1:30 p.m. UTC. If inflation exceeds expectations, the chances for another rate hike by year's end rise, potentially boosting the US dollar, so the short-term bearish trend in gold might continue. Meanwhile, lower-than-expected figures may push XAU/USD towards 1,950.
GBP Rises on the Strong U.K. Employment Change Report
The British pound (GBP) slightly increased on Monday following a cabinet reshuffle by British Prime Minister Rishi Sunak. He appointed ex-Prime Minister David Cameron as a Foreign Secretary and fired U.K. Interior Minister Suella Braverman.
The Bank of England officials Huw Pill and Katherine Mann raised concerns about the long-term impact of rising interest rates. They indicated being supportive of earlier rate cuts due to growing recession fears. The outlook for GBP/USD improved after the preliminary U.K. Gross Domestic Product data exceeded market expectations, suggesting the country might avoid a recession in 2023. Still, economic growth prospects appear grim, with expectations of reduced corporate investments for capacity expansion in Q4 due to weak demand domestically and internationally.
GBP/USD was rising during the early European trading sessions after the U.K. Employment change report showed the number of working people rose by 54,000 in the three months to August 2023, outperforming market expectations of a 198,000 decline. However, the country still faces some economic challenges, which put downward pressure on the GBP exchange rate. Today's key event for GBP/USD traders is the U.S. Consumer Price Index (CPI) report at 1:30 p.m. UTC. Higher-than-expected figures will almost certainly deepen the bearish trend in GBP/USD. However, if CPI numbers are lower than expected, the pair may rise above 1.23000.