Weak inflation could boost gold prices next week as it helps the market determine how high the Fed will set interest rates, said Ed Moya, senior U.S. market analyst at OANDA.
If inflation falls, then we may not see final rates significantly above 4.0%, then the dollar may have peaked, providing some relief for gold. However, the data was only slightly below expectations and may not be enough to change expectations for a 75 basis point rate hike by the Fed this month.
The recent optimism about gold may soon fade if market expectations for a sharp rate hike by the Federal Reserve do not subside.