Gold and Crypto Markets Eye US CPI Data for Potential Upswing

The latest US Consumer Price Index (CPI) data shows yearly inflation cooling to 3%, spurring optimism in the financial market.Amid this improvement, Gold prices surged above $2,400 in hopes of potential interest rate cuts.

Crypto assets, including Bitcoin, and stock prices are expected to benefit from the positive economic outlook.

CPI Data Boosts Financial Markets

The US CPI data shows inflation cooled to 0.1% from the previous month, bringing the yearly rate down to 3%, the lowest since the pandemic.This drop marks the first significant decrease in three years, sparking positive sentiment across traditional and digital markets.

The overall index rate fell from 3.3% in May, with consumer prices declining. As a result, gas prices dropped by 3.8%, while shelter and food prices increased by 0.2%.

The report has shifted financial market sentiments. Gold prices surged above $2,400, hitting $2,414, marking an increase of 1.8% in intra-day trading. Stocks also experienced mixed reactions, with some assets showing gains.This rise is due to growing anticipation for Federal Reserve interest rate cuts.

Chris Larkin, E-Trade MD of Trading and Investing at Morgan Stanley, noted that the CPI data brings the market closer to the expected interest rate slash.

He mentioned that unless future data turns hot," the Fed's justification for not cutting rates may weaken.

He said, A lot can happen between now and September 18, but unless most of the numbers pivot back into hot' territory, the Fed's reasoning for not cutting rates may no longer be justified."

Meanwhile, this CPI data aligns with the Federal Reserve's target of 2% yearly inflation.The Fed has maintained its benchmark interest rate amidst declining inflation. The current data supports the idea of potential easing of pressure on financial markets.

Positive Impact of Crypto Markets

The favorable CPI data has also benefited the crypto markets. Moreover, good macroeconomic news often leads to more investment in risky assets like cryptocurrencies.

As the Fed Reserve reduces market pressure, investors will likely invest more in assets like Bitcoin.Meanwhile, Bitcoin has recorded a 5.21% increase over the past week.

Australian Dollar Rises as Lower US CPI Data Suggests Softer Fed Rate Hikes

The Australian dollar (AUD) shows a positive trend, rising to 0.6798 against the USD on Thursday before dropping slightly to 0.6770. The daily chart shows that the trading pair AUD/USD is bullish.

Despite no significant Australian financial events this week, the AUD remains strong. Based on this, traders are adjusting their bets after the release of US inflation data.

Recall that the Reserve Bank of Australia (RBA) is still delaying rate cuts due to high domestic inflation. This decision could further support the AUD's recent gains.

Overall, the potential for interest rate cuts has created a strong indication of growth in the crypto markets. With the expected market jump, meme coins may also see a resurgence.

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