Alex Demolitor
Alex Demolitor is a Canadian financial writer hailing from Halifax, NS. Alex has a Bachelors Degree from King's College and passed the CFA Exam Level III. He specializes in fundamental analysis of the stock, bond, commodity, and FX markets. He also covers US & Canadian economic indicators.
by Alex Demolitor | Nov 13, 2024 | Definitions
The October 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.2% for the month, matching July, August, and September’s 0.2% rise. These data were released at 8:30 am EST on Wednesday, November 13, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.6%, a slight uptick from the 2.4% witnessed in September.
Despite that, the CPI data mostly matched economists’ estimates. The table below is courtesy of Investing.com. The left column represents October’s figures, while the right column represents forecasters’ expectations. Outside of the index levels (marked in green), the rest of the results (marked in black) aligned with the consensus.
This is welcome news to FOMC Chairman Jerome Powell. The committee’s decision to cut interest rates by 25 basis points on Nov. 7 should avoid scrutiny as the inflation results may calm fears of another price acceleration. He said during his post-meeting press conference:
“Inflation has moved down a great deal from its highs of two years ago, and we judge, as I mentioned, that it’s on a sustainable path back to 2%. The job’s not done on inflation, but we judged in September that it was appropriate to begin to recalibrate our policy stance to reflect this progress, and today’s decision is really another step in that process.”
He added:
“We’re not declaring victory, obviously, but we feel like the story is very consistent with inflation, continuing to come down on a bumpy path over the next couple of years and settling around 2%. That story is intact, and it won’t be one or two really good data months or bad data months aren’t going to really change the pattern at this point now that we’re this far into the process.”
As a result, while October’s CPI data is another chapter in Powell’s inflation story, the momentum continues to trend in a positive direction.
Most headline inflation metrics were well-behaved in October, with only used cars and trucks and electricity increasing by 2.7% and 1.2% month-over-month. Core inflation (which excludes the impacts of food and energy), rose by 0.3% in October, matching August and September’s print. But, the shelter index rose by 0.4%, a noticeable increase from the 0.2% reported in September.
Food Prices
The food index showcased progress in October, rising by 0.2%, and declining from September’s 0.4% print. Five of the six major grocery store food indexes increased:
- Cereals and bakery products (+1.0%)
- Meats, poultry, fish, and eggs (-1.2%)
- Dairy and related products (+1.0%)
- Fruits and vegetables (+0.4%)
- Nonalcoholic beverages (+0.4%)
- Other food at home (+0.1%)
In addition, the food away from home index rose by 0.2% — a decline from August and September — which means restaurant prices largely tracked overall inflation in October.
Energy Prices
The energy index was flat in October after declining by 1.9% in September. Gasoline prices dropped by 0.9% (1.9% without seasonal adjustments), while electricity and natural gas prices rose by 1.2% and 0.3%, respectively.
Core CPI October 2024
The October core CPI rose by 0.3% month-over-month and 3.3% Y-o-Y. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.4%) [September: +0.2%]
- Rent index: (+0.3%) [September: +0.3%]
- Owners’ equivalent rent: (+0.4%) [September: +0.3%]
- Motor vehicle insurance: (-0.1%) [September: +1.2%]
- Medical care services: (+0.4%) [September: +0.7%]
- Physician services: (+0.5%) [September: +0.9%]
- Hospital services: (+0.5%) [NA]
- Airline fares: (+3.2%) [September: +3.2%]
Seasonally Unadjusted CPI Data for October 2024
Before seasonal adjustments, the CPI-U for October 2024 increased by 2.6% Y-o-Y, rising to an index level of 315.664. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
More Cuts to Come?
While investors are eager for rate cuts and a return to pre-pandemic monetary policy, Powell cautioned that the ebbs and flows of economic data will decide the FOMC’s future path.
“Nothing in the economic data suggests that the committee has any need to be in a hurry to get there,” he said. “We are seeing strong economic activity, we are seeing ongoing strength in the labor market; we’re watching that carefully. But we do see maintaining strength there. And so we think that the right way to find neutral, if you will, is carefully, patiently.”
He added:
“The precise timing of these things is not as important as the overall arc of them, and the arc of them is to move from where we are now to the sense of neutral, a more neutral policy. We don’t know exactly where that is, we only know it by its works. We’re pretty sure it’s below where we are now.”
So, while resilient economic data allows Powell to take a patient approach, the long-term trend should eventually produce lower rates in the months ahead.
In the meantime, a major divergence for risk assets unfolded following the Nov. 6 U.S. Presidential election. Bitcoin and Ethereum soared, while gold and silver sold off. However, the U.S. dollar was a major beneficiary, and gold often has a negative correlation with the greenback.
Yet, the short-term correction should give way to higher prices over time, as Goldman Sachs forecasts gold will hit $3,000 in 2025. The blue line below tracks gold’s price path, while the gray line at the top measures the implied futures price, and the dotted red line measures Goldman Sachs’ forecasted price. As you can see, the investment bank is more bullish than the futures market and expects gold to outperform for the foreseeable future.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
by Alex Demolitor | Oct 10, 2024 | Monthly CPI Updates
The September 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.2% for the month, matching July and August’s 0.2% rise. These data were released at 8:30 am EST on Thursday, October 10, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.4%, down from July’s 2.9% and August’s 2.5% prints.
Although the results were relatively mild, all of the CPI metrics outperformed economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents September’s figures, while the right column represents forecasters’ expectations. As you can see, each data point (marked in green) was stronger than expected.
After FOMC Chairman Jerome Powell said during his annual Jackson Hole Economic Symposium speech that rate cuts were on the horizon, the committee delivered a 50 basis point rate cut on Sep. 18. Powell said during his post-meeting press conference:
“As inflation has declined and the labor market has cooled, the upside risks to inflation have diminished, and the downside risks to employment have increased. We now see the risks to achieving our employment and inflation goals as roughly in balance, and we are attentive to the risks to both sides of our dual mandate.”
He added: “If the economy remains solid and inflation persists, we can dial back policy restraint more slowly. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we are prepared to respond. Policy is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate.”
Thus, while Powell voiced concerns about both sides of the monetary policy equation, today’s inflation print highlights how fits and starts should be expected along the way.
Global markets had mixed responses to the CPI data, as stocks, bonds, precious metals, and the U.S. dollar moved relatively calmly in different directions.
Notable monthly results within September’s headline inflation data showed transportation services prices jumped by 1.4%, apparel by 1.1%, and medical care services by 0.7%. Core inflation (which excludes the impacts of food and energy), rose by 0.3% in September, matching August’s print. However, the shelter index rose by 0.2%, a noticeable decline from the 0.5% reported in August.
Food Prices
The food index increased by 0.4% in September, well above the 0.1% recorded in August. Five of the six major grocery store food indexes showcased inflation, while one was flat.
- Cereals and bakery products (+0.3%)
- Meats, poultry, fish, and eggs (+0.8%)
- Dairy and related products (+0.1%)
- Fruits and vegetables (+0.9%)
- Nonalcoholic beverages (+0.0%)
- Other food at home (+0.2%)
In addition, the food away from home index rose by 0.3% in September, mirroring August’s rise, and highlighting how restaurant prices continue to outpace overall inflation.
Energy Prices
The energy index declined by 1.9% in September, building on the 0.8% drop in August. Gasoline prices plunged by 4.1% (5.1% without seasonal adjustments), while electricity and natural gas prices both rose by 0.7%.
Core CPI September 2024
The September core CPI rose by 0.3% month-over-month and 3.3% Y-o-Y. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.2%) [August: +0.5%]
- Rent index: (+0.3%) [August: +0.4%]
- Owners’ equivalent rent: (+0.3%) [August: +0.5%]
- Motor vehicle insurance: (+1.2%) [August: +0.6%]
- Medical care services: (+0.7%) [August: -0.1%]
- Physician services: (+0.9%) [August: +0.0%]
- Hospital services: (NA) [NA]
- Airline fares: (+3.2%) [August: +3.9%]
Seasonally Unadjusted CPI Data for September 2024
Before seasonal adjustments, the CPI-U for September 2024 increased by 2.4% Y-o-Y, rising to an index level of 315.301. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
Was a 50 Basis Point Rate Cut a Mistake?
While investors were nervous that the FOMC was ‘behind the curve,’ September’s U.S. nonfarm payrolls report came in more than 100k above expectations.
The chart below from Deutsche Bank highlights how it was the third-largest employment increase in the same month the FOMC cut interest rates since 1957. If you analyze the red bar on the left, you can see the 254k jobs added implies the U.S. economy remains in solid shape. Consequently, with inflation outperforming expectations today, it may give the FOMC cause for pause at its next meeting.
Overall, risk assets have rallied recently, as economic strength is good news for many of the 2024 winners like Bitcoin, Ethereum, gold, silver, and U.S. stocks. Moreover, gold has shined the brightest throughout the year, and Bank of America told clients that rising debt levels and U.S. dollar uncertainty continue to fuel the bull market.
Plus, with gold performing well during periods of calm and crisis, the chart below highlights how it’s often a portfolio ally when global uncertainty strikes.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
by Alex Demolitor | Sep 11, 2024 | Monthly CPI Updates
The August 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.2% for the month, matching July’s 0.2% rise. These data were released at 8:30 am EST on Wednesday, September 11, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.5%, down from July’s 2.9% and June’s 3.0% prints. It was the smallest Y-o-Y increase since February 2021.
Adding more merit to the rate-cut argument, most of the CPI metrics matched economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents August’s figures, while the right column represents forecasters’ expectations. As you can see, the monthly core CPI (marked in green) was stronger than expected, while the others (marked in black) met expectations.
As the financial market’s worst-kept secret, the Federal Open Market Committee (FOMC) is widely expected to cut interest rates on Sep. 18. Chairman Jerome Powell said during his annual Jackson Hole Economic Symposium speech on Aug. 23:
“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.
“We will do everything we can to support a strong labor market as we make further progress toward price stability. With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2 percent inflation while maintaining a strong labor market. The current level of our policy rate gives us ample room to respond to any risks we may face.”
Thus, while investors debate whether Powell will opt for a 25 or 50 basis point rate cut, the future direction of the U.S. interest rates has become abundantly clear.
Global stock markets largely declined after the CPI release, as volatility has increased in recent weeks. Conversely, Treasury bonds, precious metals, and the U.S. dollar exhibited mixed performances.
August’s headline inflation deceleration was driven by lower utility gas prices (-1.9%), fuel oil (-1.9%), and used cars and trucks (-1.0%). Core inflation (which excludes the impacts of food and energy), rose by 0.3% in August, up from 0.2% in July, and 0.1% in June. The shelter index rose by 0.5% (up from 0.4% in July) and the BLS described the jump as “the main factor in the all items increase.”
Food Prices
The food index increased by 0.1% in August, a deceleration from June and July’s 0.2% prints. Two of the six major grocery store food indexes showcased inflation, while four realized deflation.
- Cereals and bakery products (-0.1%)
- Meats, poultry, fish, and eggs (+0.8%)
- Dairy and related products (+0.5%)
- Fruits and vegetables (-0.2%)
- Nonalcoholic beverages (-0.7%)
- Other food at home (-0.3%)
In addition, the food away from home index rose by 0.3% in August, ahead of July’s 0.2% rise, meaning restaurants continue to increase their menu prices.
Energy Prices
The energy index declined by 0.8% in August after experiencing a flat performance in July. Electricity and natural gas prices slumped by 0.7% and 1.9%, respectively, while gasoline prices dropped by 0.6% excluding seasonal adjustments.
Core CPI August 2024
The August core CPI rose by 0.3% month-over-month and 3.2% Y-o-Y. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.5%) [July: +0.4%]
- Rent index: (+0.4%) [July: +0.5%]
- Owners’ equivalent rent: (+0.5%) [July: +0.4%]
- Motor vehicle insurance: (+0.6%) [July: +1.2%]
- Medical care services: (-0.1%) [July: -0.3%]
- Physician services: (+0.0%) [July: +0.1%]
- Hospital services: (NA) [July: -1.1%]
- Airline fares: (+3.9%) [July: -1.6%]
Seasonally Unadjusted CPI Data for August 2024
Before seasonal adjustments, the CPI-U for August 2024 increased by 2.5% Y-o-Y, rising to an index level of 314.796. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
25 or 50?
With investors’ anxiety on full display since August, the debate has shifted from battling inflation to avoiding a recession. Some market participants believe the FOMC is ‘behind the curve,’ meaning that interest rates have been too high for too long and the committee can’t avoid an economic slowdown.
The latest U.S. Job Openings and Labor Turnover Survey (JOLTS) showcases a material decline in employment opportunities, which highlights Powell’s point that “upside risks to inflation have diminished, and the downside risks to employment have increased.”
Therefore, while the debate between a 25 or 50 basis point rate cut should intensify over the next several days, only time will tell if the recent deceleration is a growth scare or something more ominous.
Overall, risk assets have suffered recently, and 2024 winners like Bitcoin, Ethereum, gold, silver, and U.S. stocks have pulled back from their recent highs. However, global central banks have piled into the yellow metal, and the World Gold Council noted on Jul. 30, “Combined with Q1 net purchases, central bank gold demand in H1 totaled 483t, the highest first half year in our data series.” As a result, physical demand for bullion remains robust.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
by Alex Demolitor | Aug 14, 2024 | CPI, Monthly CPI Updates
The July 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.2% for the month, a rise from June’s 0.1% decline. These data were released at 8:30 am EST on Wednesday, August 14, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.9%, decelerating from June’s 3.0% Y-o-Y CPI print.
Doing little to derail the chances of future rate cuts, most of the CPI metrics matched economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents July’s figures, while the right column represents forecasters’ expectations. As you can see, the Y-o-Y CPI (marked in red) was weaker than expected, while the others (marked in black) met expectations.
To that point, while Fed Chairman Jerome Powell said on Jul. 31 that “we’re not quite at that point” where a lower overnight lending rate is justified, he added, “We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate.”
Moreover, the FOMC’s latest Monetary Policy Statement noted that “The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance.” In other words, the FOMC has become more attentive to a slowing U.S. labor market, which may pave the way for less emphasis on inflation and foster monetary easing.
Global markets had a mixed response to the CPI release, with American and European indices largely remaining range-bound. Likewise, Treasury bonds, precious metals, and the U.S. dollar had mostly small reactions since the as-expected CPI data wasn’t much of a surprise.
July’s headline inflation deceleration was driven by lower used cars and trucks prices (-2.3%), utility gas (-0.7%), and apparel (-0.4%). Core inflation (which excludes the impacts of food and energy), rose 0.2% in July, a small increase from June’s 0.1% rise. The shelter index rose 0.4% and accounted for nearly 90% of the headline CPI’s rise.
Food Prices
The food index increased by 0.2% in July, matching the 0.2% print from June. Three of the six major grocery store food indexes showcased inflation, while three realized deflation.
- Cereals and bakery products (-0.5%)
- Meats, poultry, fish, and eggs (+0.7%)
- Dairy and related products (-0.2%)
- Fruits and vegetables (+0.8%)
- Nonalcoholic beverages (+0.5%)
- Other food at home (-0.5%)
In addition, the food away from home index rose by 0.2% in July, a noticeable slowdown from the 0.4% recorded in May and June. Consequently, restaurants pared back some of their pricing practices this month.
Energy Prices
The energy index was flat in July after falling 2.0% in June. Electricity and fuel oil prices rose by 0.1% and 0.9%, respectively, while natural gas prices fell by 0.7%. Gasoline prices were also flat in July on a seasonally adjusted basis and up by 0.8% excluding adjustments.
Core CPI July 2024
The July core CPI rose by 0.2% month-over-month, which is within the Fed’s range of expectations. On a Y-o-Y basis, the metric rose 3.2%. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.4%) [June: +0.2%]
- Rent index: (+0.5%) [June: +0.3%]
- Owners’ equivalent rent: (+0.4%) [June: +0.3%]
- Motor vehicle insurance: (+1.2%) [June: +0.9%]
- Medical care services: (-0.3%) [June: +0.2%]
- Physician services: (+0.1%) [June: +0.1%]
- Hospital services: (-1.1%) [June: +0.1%]
- Airline fares: (-1.6%) [June: -5.0%]
Seasonally Unadjusted CPI Data for July 2024
Before seasonal adjustments, the CPI-U for July 2024 increased (+2.9%) Y-o-Y, rising to an index level of 314.540. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
Growth Concerns Overshadow Inflation?
Because price stability is only one-half of the Fed’s dual mandate, investors always worry that too much emphasis on inflation could slow economic growth and derail the other half of the dual mandate — maximum employment.
As a result, while the financial markets have stabilized in recent days, last week’s ‘flash crash’ and calls for emergency rate cuts highlight the anxiety that occurs alongside rate-cutting cycles. Historically, rate cuts have sometimes preceded recessions, so investors are looking for clues that a hard landing can be avoided. Thus, weaker data is good for financial assets as long as it’s not too weak.
Consequently, 2024 winners like Bitcoin and Ethereum have suffered recently, as have U.S. stocks. And while silver has fallen below the important $30 level, gold has largely maintained its strength. Therefore, the yellow metal has shown an ability to perform during good and bad periods throughout 2024.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
by Alex Demolitor | Jul 11, 2024 | CPI
The June 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation declined by 0.1% for the month, a slight drop from May’s flat print (+0.0%). These data were released at 8:30 am EST on Thursday, July 11, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 3.0%, which is also a drop from May’s 3.3% Y-o-Y CPI reading.
Increasing the chances of a rate cut in the months ahead, the headline and core CPIs came in below economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents June’s figures, while the right column represents forecasters’ expectations. As you can see, the monthly and Y-o-Y CPIs (marked in red) were weaker than expected.
Yet, while U.S. Federal Reserve Chairman Jerome Powell said on Jul. 10 that “I do have some confidence” that inflation will return to 2%, he cautioned, “I am not ready to say” rate cuts are necessary. “There is a path to getting back to full price stability while keeping the unemployment rate low,” Powell added. “We’re on it. We’re very focused on staying on that path.”
Furthermore, with the U.S. presidential election scheduled for November, he reiterated, “Our undertaking is to make decisions when and as they need to be made, based on the data, the incoming data, the evolving outlook, and the balance of risks, and not in consideration of other factors, and that would include political factors.”
Thus, while Powell has to weigh several variables, June’s weak CPI print should have him feeling more confident about the FOMC’s projections.
Global markets had a mixed response to the CPI slowdown, with American and European indices gyrating, while Treasury bonds and precious metals rallied and the U.S. dollar slumped. Rate cuts by the Fed could help turn the tide for the CAD, which has underperformed the USD in recent months.
June’s headline inflation deceleration was driven by lower gasoline prices (-3.8%), used cars and trucks (-1.5%), electricity (-0.7%), and transportation services (-0.5%). Core inflation (which excludes the impacts of food and energy), rose 0.1% in June, the weakest monthly reading since August 2021. The shelter index rose 0.2%, with rents up 0.3%. Both were also the smallest increases since August 2021.
Source: Bureau of Labor Statistics
Food Prices
The food index increased by 0.2% in June after rising 0.1% in May. Tomatoes fell by 3.3%, breakfast cereal by 2.0%, while pork chops were up 3.1% and eggs up 3.5%. Four of the six major grocery store food indexes showcased inflation, while two realized deflation.
- Cereals and bakery products (-0.1%)
- Meats, poultry, fish, and eggs (+0.2%)
- Dairy and related products (+0.6%)
- Fruits and vegetables (-0.5%)
- Nonalcoholic beverages (+0.1%)
- Other food at home (+0.5%)
In addition, the food away from home index jumped 0.4% in June matching the results from May. Consequently, restaurants continue to demonstrate resilient pricing power.
Energy Prices
The energy index dropped 2.0% in June, on par with the 2.0% drop in May. Gasoline, electricity, and fuel oil prices fell by 3.8%, 0.7%, and 2.4%, respectively, while natural gas prices rose by 2.4%
Core CPI June 2024
The June core CPI rose by 0.1% month-over-month, the lowest monthly print in 2024. On a Y-o-Y basis, the metric rose 3.3%. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.2%) [May: +0.4%]
- Rent index: (+0.3%) [May: +0.4%]
- Owners’ equivalent rent: (+0.3%) [May: +0.4%]
- Motor vehicle insurance: (+0.9%) [May: -0.1%]
- Medical care services: (+0.2%) [May: +0.3%]
- Physician services: (+0.1%) [May: +0.0%]
- Hospital services: (+0.1%) [May: +0.5%]
- Airline fares: (-3.6%) [May: -5.0%]
Source: Bureau of Labor Statistics
Seasonally Unadjusted CPI Data for June 2024
Before seasonal adjustments, the CPI-U for June 2024 increased (+3.0%) Y-o-Y, rising to an index level of 314.175. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
Source: Bureau of Labor Statistics
Gold and Silver Still Shining Bright
With the CPI slowdown suppressing Treasury yields and weakening the U.S. dollar, gold remains one of the best-performing assets in 2024. Similarly, silver has soared above $30 an ounce, reaching its highest level in more than a decade. Because precious metals futures contracts are priced in USD, a weaker greenback makes it more affordable for foreign investors to purchase the pair. As such, lower Treasury yields, a weaker dollar, and increased rate-cut enthusiasm create a profitable environment for precious metals enthusiasts.
However, the CPI release noted how gasoline prices declined by 3.6% and 3.8% in May and June. And with crude oil prices rising recently, they usually impact gasoline prices with a lag. As a result, the gasoline index should rise in July and temper some of the downward CPI momentum.
All in all, while 2024 winners like gold, silver, Bitcoin, and Ethereum should maintain their strength absent a recession, the same could be said for U.S. stocks. The S&P 500 and NASDAQ have also rallied sharply in 2024, but big tests loom over the next few weeks. With some of the index’s largest constituents — like Apple, Microsoft, and Meta Platforms — reporting earnings soon, investors expect upbeat results.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
