US Dollar Jumps on Stronger-Than-Expected Inflation Data, Gold Crumbles into Support

US Dollar Index, US Treasuries, Gold Analysis and Charts

• US shelter and food costs continue to rise, energy costs fall.
• US dollar index jumps over half a point, and gold turns lower.

US inflation came in above market expectations earlier today, sending the US dollar to a fresh three-month high. According to the US Bureau of Labor Statistics,

‘The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in January on a seasonally adjusted basis, after rising 0.2 percent in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased by 3.1 percent before seasonal adjustment.

The index for shelter continued to rise in January, increasing 0.6 percent and contributing over two-thirds of the monthly all items increase. The food index increased 0.4 percent in January, as the food at home index increased 0.4 percent and the food away from home index rose 0.5 percent over the month. In contrast, the energy index fell 0.9 percent over the month due in large part to the decline in the gasoline index.’

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US Treasury yields rose after the release with the rate-sensitive US 2-year rallying by 12 basis points to 4.60%, as traders begin to push back expectations of an early US rate cut. The May meeting is now being priced out, while 100 basis points of cuts are now seen this year, down from 150 basis points at the start of 2024.

US 2-Year UST Yield

The US dollar index posted a fresh three-month high after the release and broke above a prior level of resistance at 104.66.

US Dollar Index Daily Chart

Gold is back under pressure and is testing support around the $2,009/oz. level and looks set to also test big-figure support at $2,000/oz.

Gold Daily Price Chart

Charts via TradingView

Retail trader data show60.37% of traders are net-long gold with the ratio of traders long to short at 1.52 to 1.The number of traders net long is 9.54% lower than yesterday and 6.77% lower than last week, while the number of traders net short is 20.35% higher than yesterday and 11.68% higher than last week.

See how daily and weekly changes in IG Retail Trader data can affect sentiment and price action.

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