On Wednesday, May 10, we have US inflation data out and the market is at an interesting point right now. The USD has been weakening after the Federal Reserve meeting this week on expectations that the Fed has finished its hiking cycle and that a rate cut may happen as soon as July. Short Term interest rate markets are seeing nearly 100bps of rate cuts from the Fed this year and that is helping lift gold higher.

Looking at Seasonax’s risk event tool we can also see that on the day prior to the US inflation print and the day after it, gold tends to gain. So, with gold likely to benefit from falling US rate expectations, a weaker USD, and a weak US CPI print, could gold be about to move sharply higher?

Major Trade Risks: The major risk here is if the USD starts to strengthen on any banking fears that return and/or a very high CPI print that will bring expectations of more Fed rate hikes to come.

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