Consumer price data out on Thursday defied many of our expectations. Inflation data was softer than expected, rising 0.2% vs the 0.3% expected. This translates to 1.8% inflation per year, slightly below the Fed’s target of 2%. The report knocked the dollar down, which boosted gold prices through their usual fundamental relationship.
Here’s a big clue to careful readers: When news like this comes out, watch what gold options or futures prices do for contracts 3, 6 and 12 months out. If the gold futures price doesn’t move about the same amount in the same direction, it means market sentiment believes something more important is going on.
This Gold Enthusiast can’t overstate how important these clues are to understanding where the market is likely headed in those time frames. Today’s featured article tells the story of yesterday’s news from the gold perspective, while this article gives the view from the consumer price side.