The media must stop referring to food #inflation, energy inflation, wage inflation, commodity inflation, etc. as it lets the #Fed off the hook. There's only one kind of inflation, the expansion of the money supply. So it's all monetary inflation, and it's the Fed that creates it.
Wouldn’t surprise me if longtime market participants feel that, judging from yield curve moves post inflation numbers, the government bond market is sensing an increasing risk of a Fed policy mistake: a wrong assessment of inflation (“transitory”) forcing a disorderly tightening
according to the Fed's proprietary Core CPI - Arizona Iced Tea-only basket (excluding all consumer goods, food, rent, and energy), inflation is nonexistent
INFLATION IN AMERICA: "Kudlow" Host @larry_kudlow answers viewers questions on how the Fed is impacting inflation. pic.twitter.com/D0cP0YDzrW
13 October, 2021 - 07:50pm
Gold advanced nearly 2% on Wednesday on a retreat in the dollar and US Treasury yields, with investors’ focus on minutes from the Federal Reserve’s latest policy meeting for confirmation of its tapering strategy.
Spot gold rose 1.9% to $1,794.73 per ounce by noon EDT, near its highest in a month. US gold futures were up 2.0% to $1,795.40 an ounce in New York.
Other precious metals followed, with spot silver rising 2.7% to $23.17 per ounce, platinum gaining 1.1% to $1,023.50 and palladium adding 3.2% to $2,116.50.
“Gold is just following yields at the moment. The initial reaction after CPI (consumer price index) data was a big spike in yields, which is now starting to fade away,” Daniel Pavilonis, senior market strategist at RJO Futures, said in a Reuters report.
Gold initially pared gains as benchmark 10-year Treasury yields rose above 1.6% after data showed a solid increase in US consumer prices for September, with further price jumps expected in the coming months.
However, a subsequent pullback in yields, which reduced the opportunity cost of holding non-interest-bearing gold, drove a strong rally in the precious metals market.
“It’s a situation where gold is an inflationary metal, which should be going up, but initial rate shocks capped its upside potential,” Pavilonis added.
Bullion also drew support from a slide in the US dollar and worries that high inflation could hit global economic growth prospects.
“Given how the stagflation talks continue to drain global sentiment and promote risk aversion, this could support gold bugs,” said FXTM analyst Lukman Otunuga.
Investors now await the release of minutes from the US central bank’s September meeting amid expectations for tapering of economic support as soon as next month.
Meanwhile, a group of banks that partnered with the London Metal Exchange to launch gold and silver futures in 2017 is preparing to abandon the project after hoped-for volumes did not materialize.