Inflation is hotter than expected, gold colder than hoped

9.16.22 - How Inflation Reduction Act Impacts Retirees

Gold last traded at $1,675 an ounce. Silver at $19.50 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on bargain hunting and a flat dollar. U.S. stocks headed for sharp weekly losses following an ugly earnings warning from FedEx about the global economy.

FX Street--"The annual CPI decelerated in August but came in higher than expected. Bets on a more hawkish Fed increased, while in the case of gold, they decreased.

Inflation stayed hot in August. Unbelievable! At least for the majority of pundits who expected softer inflation. However, I'm not surprised, as I've repeated many times that 'inflation is likely to stay elevated for some time.' But let’s stop bragging - and start digging into the recent CPI report.

What does the hot CPI report mean for the gold market? Well, it strengthened expectations of a hawkish Fed and boosted bond yields.....

They say that there is always a silver lining. Indeed, forget about the peak in inflation and the soft landing. Given that the Fed was delayed in its fight against inflation and that interest rates are a rather blunt tool of monetary policy, the U.S. central bank is probably going to overdo it, which will lead to a recession. Then - or sooner if the Fed pivots before the downturn - gold will rally again."