Gold Price Edges Higher Amid Inflation Concerns, Fed Rate Hike Odds Increase

he gold market has seen minor gains as the Federal Reserve's tightening measures are prompted by stickier inflation. The CME FedWatch Tool predicts a 83.1% chance of a Fed rate hike, which is causing traders to brace for the weekend. The XAU/USD is trading at $1992.93, up 0.28% after hitting a daily low of 1976.31. The latest data from the United States showed that inflation remains high, despite the Personal Consumption Expenditure (PCE) rate slowing down to 4.2% YoY, with a monthly growth rate of 0.1%. The core PCE remains unchanged at 4.6% YoY, indicating the stickiness of inflationary pressures.

As a result of these developments, Robert Kiyosaki, the author of Rich Dad Poor Dad, has warned of economic chaos, a war breaking out, hyperinflation, and rising starvation. He also talked about de-dollarization on a "massive scale", as many countries such as Saudi Arabia, Indonesia, and the BRICS nations are shifting away from the U.S. dollar for trade settlements. Kiyosaki explained that Gresham's Law and Triffin's Dilemma have been violated, leading to the printing of probably quadrillions of dollars. He warned that when those dollars come back into America, there will be hyperinflation, leading to the rise of dictators and murder.

The recent collapse of several prominent banks in the U.S. and Europe has resulted in depositors withdrawing $508 billion dollars from banks worldwide. This has raised concerns about more bank runs and a crisis of confidence in the banking system. The recent actions by the Federal Reserve have led many to believe that the central bank is determined to tame inflation by continuing to raise rates, despite the clear signals of a U.S. recession. Over the past 70 years, a Fed pause or pivot has been followed by an economic recession 85% of the time, and immediately thereafter, gold prices began a strong up-leg to new all-time highs.

There are also worries over a debt ceiling showdown in the U.S. options markets, as investors fear that lawmakers will be unable to reach a deal in coming weeks. Treasury Secretary Janet Yellen warned that a default would trigger an "economic catastrophe" that would send interest rates higher for years to come.

The gold price is expected to increase volatility in the upcoming days, with the Federal Reserve meeting on Wednesday, the European Central Bank decision on Thursday, and the U.S. jobs report on Friday. If the monthly close is above the key $2000 level, it would be a significant technical achievement and a step closer to the market beginning to price in a new floor at a level which has been strong resistance for the past 12 years. A Bank of America commodity strategist postulated that gold, if it continues to flourish in 2023, could pave the way for a climb to $2,500 per ounce. The strategist also stated that non-commercial purchases do not need to increase materially to justify gold hitting $2,500 this year. Central banks, including China, have been purchasing large amounts of gold in 2023, and the trend of acquisitions has continued into 2023.