《Tonight’s U.S. PCE Preview》
At 8:30 tonight, the Fed’s most closely watched inflation gauge, the PCE price index, is due out.
Tonight’s PCE data won’t really determine whether the Fed will act; it will determine how certain a December move is.
A reading of 0.3% would turn a rate hike from highly likely into a near certainty. A 0.2% reading would nudge the odds back down, but not below 50%, with oil still above $100.
An overall inflation reading of 3.6% would itself put pressure on the Fed, while 0.4% would lead markets to start pricing in a higher terminal rate.
The data will spell out the path Warsh hasn’t described.
Tonight’s PCE data will have a direct impact on gold (XAU). If it comes in at 0.3%, gold will likely keep grinding around $4,000. There’s no near-term catalyst for an upside breakout, but structural buying should provide support on the downside.
If tonight’s PCE comes in at 0.2%, it would be a dovish catalyst for gold and silver, and a recovery above $4,000 would be within reach.
If it comes in at 0.4%, real yields and the dollar will regain the upper hand, and the $4,000 support level will face a serious test.
In short, tonight’s baseline is 0.3%, and the surprise to watch for is 0.4%. For the Fed, that determines how firmly a December rate hike is on the table; for gold, it determines whether $4,000 remains a level to grind around or gets repriced.
I’ll share my take as soon as the data comes out, so stay tuned. $XAU
At 8:30 tonight, the Fed’s most closely watched inflation gauge, the PCE price index, is due out.
Tonight’s PCE data won’t really determine whether the Fed will act; it will determine how certain a December move is.
A reading of 0.3% would turn a rate hike from highly likely into a near certainty. A 0.2% reading would nudge the odds back down, but not below 50%, with oil still above $100.
An overall inflation reading of 3.6% would itself put pressure on the Fed, while 0.4% would lead markets to start pricing in a higher terminal rate.
The data will spell out the path Warsh hasn’t described.
Tonight’s PCE data will have a direct impact on gold (XAU). If it comes in at 0.3%, gold will likely keep grinding around $4,000. There’s no near-term catalyst for an upside breakout, but structural buying should provide support on the downside.
If tonight’s PCE comes in at 0.2%, it would be a dovish catalyst for gold and silver, and a recovery above $4,000 would be within reach.
If it comes in at 0.4%, real yields and the dollar will regain the upper hand, and the $4,000 support level will face a serious test.
In short, tonight’s baseline is 0.3%, and the surprise to watch for is 0.4%. For the Fed, that determines how firmly a December rate hike is on the table; for gold, it determines whether $4,000 remains a level to grind around or gets repriced.
I’ll share my take as soon as the data comes out, so stay tuned. $XAU
