Harvest Global Markets :

The latest release from the Bureau of Labor Statistics on Friday highlighted that US inflation has dipped and made investors hopeful that the FED may re-consider further aggressive interest rate hikes and down-shift to a half-point rate-hiking pace. Markets are now pricing in an 85% chance of a 50-basis point hike by the Fed in December, compared to last week’s expectations of a 47% chance.

Resultantly, gold prices are surging after this cool inflation report and due to expectations of a pause or slow down on interest rate hikes. The dollar extended losses to a more than one-week low, making gold more attractive for other currency holders. Although gold is seen as an inflation hedge, higher interest rates raise the opportunity cost of holding bullion.

The consumer price index increased 0.4% for the month and 7.7% from a year ago, both lower than estimates. Workers saw yet another salary decrease in October as a result of the rising cost of living. According to a second BLS report, real average hourly earnings decreased by 0.1% for the month and were down 2.8% year. However, a jump in the unemployment rate to 3.7% fueled optimism that the U.S. central bank might be less aggressive in its rate hikes going forward. Data released on previous Friday revealed that U.S. firms employed more people than anticipated in October.

Furthermore, getting inflation down is critical heading into the holiday shopping season. A recent survey by Clever Real Estate found that about 1 in 3 Americans plan on cutting back spending this year due to higher prices.

Also on the radar is U.S. midterm elections results, which will determine control of Congress and could spur moves all over the market.

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