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Ahead of the first FOMC Monetary Policy Meeting of 2023 scheduled for January 31-February 1 – U.S PCE Inflation data is hotly anticipated to be the next big market-moving event that traders will not want to miss.

Data released earlier this month, showed U.S annual inflation fell to its lowest level in more than a year, offered the strongest evidence yet that price pressures have peaked and signaling the start of a disinflationary trend that lasts throughout 2023.

The rate of increase in the Consumer Price Index, published by the Bureau of Labor Statistics, declined for a sixth consecutive month, registering an annual increase of 6.5%.

While there is no denying inflation is still near a multi-decade high – this was the lowest reading since October 2021 and represents a notable decline from the 9.1% level reached in June.

This week, trader’s attention will be on the Fed's favourite measure of inflation – The Core Personal Consumption Expenditures Price Index – as the outcome will ultimately play a very influential role in the size of the Fed's next rate hike decision.

Fed officials will assess the latest inflation data as they decide on their next policy move. Having stepped down to a 50 basis point rate increase last month – following four consecutive super-sized 75 basis point rate hikes – the central bank is considering whether it can ‘pivot further’ to a more typical 25 basis point hike at its upcoming meeting.

To pivot or not to pivot is now the million-dollar question – or perhaps the $1.1 million question, adjusted for inflation.

Right now, Gold prices are trading in a narrow range, which indicates a big move is on the horizon. The only question now, is which way.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

 

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Trading has large potential rewards, but also large potential risk and may not be suitable for all investors. The value of your investments and income may go down as well as up. You should not speculate with capital that you cannot afford to lose. Ensure you fully understand the risks and seek independent advice if necessary.

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