In gold investment , a lot of data can predict the price trend of gold, so how to use these data? How to use CPI and PPI to predict the trend of gold market ?
The Consumer Price Index (CPI), abbreviated as CPI, is an indicator of price changes that reflects the prices of goods and services related to residents’ lives. It is usually used as an important indicator to observe the level of inflation. If the consumer price index rises too much, it indicates that inflation has become a factor of economic instability. Generally speaking, when the CPI>3% increase is inflation; and when the CPI>5% increase, it is serious inflation.
Producer Price Index (PPI): The main purpose of the producer price index is to measure the price changes of various commodities at different stages of production. It is an important economic indicator that reflects the price changes in the production field in a certain period, and it is also an important basis for formulating relevant economic policies and national economic accounting.
PPI can reflect the price fluctuations of raw materials obtained by producers, calculate the expected CPI, and thus estimate the risk of inflation. In short, rising PPI is not a good thing. If producers shift costs, prices of final consumer goods will rise, and inflation will rise. If it is not transferred, corporate profits will decline and the economy will have downside risks. So, how to predict the trend of gold price based on CPI and PPI .
Both CPI and PPI are indicators of inflation , which is one of the eight factors that affect the price of gold .
It is understood that what we usually call rising prices is a kind of inflation, and the reason is that the issuance of the central bank of the country is too high. Inflation and the price of gold have a close and positive correlation with each other. Gold usually has an obvious “safeguarding function” under the specific conditions of rising inflationary pressure.
Generally speaking, if the producer price index rises, it is mostly bullish for the dollar and bearish for the spot gold price ; if the producer price index falls, it is bearish for the dollar and bullish for the spot gold market.