Another Decline Despite Lower US Treasury Yields

Gold is little changed in the Asia-Pac session, after seeing further weakness, down -0.3% at $1908.12, on Wednesday. It appeared to be an outsized loss considering US Treasury yields pushed lower after US CPI with only minimal USD strength on balance.

• US tsys bull steepened, with yields 1-5bp lower, as market participants parsed the latest CPI data with details, bolstering the case for a pause at next week’s Fed policy meeting while keeping the door open to an increase in November. FOMC dated OIS was stable, a terminal rate of 5.45% was seen for December with ~50bps of cuts by July 2024.
• Headline CPI rose 3.7% on an annualised basis, up from 3.2% in July and the above consensus forecast of 3.6%. The increase was primarily driven by a 10.6% jump in gasoline prices. On a monthly basis, the core reading of +0.3% m/m was above the +0.2% consensus estimate.
• From a technical standpoint, bullion’s low of $1905.69 took another step closer to support at $1903.9 (Aug 25 low), according to MNI’s technicals team.