Gold and stock market investors' eyes are on US inflation: Banks' forecasts have been announced

The most critical agenda item of the day in the US markets is the September Consumer Price Index (CPI).

The data, which will be announced at 15.30 Türkiye time, will be closely followed in terms of the interest policy that the US Federal Reserve (Fed) will follow in the remaining part of the year.

According to a survey conducted by the Wall Street Journal with 14 major investment banks, consumer prices are expected to increase by 0.6 percent monthly in September.

Annual inflation is expected to increase from 3.4 percent to 3.6 percent.

GASOLINE PRICES MAY PUSH HEADLINE INFLATION UP

One of the main factors behind the expectation of a rise in headline inflation is energy prices.

The average gasoline price per gallon in the USA, breaking a period record by exceeding $4.30, put upward pressure on the CPI in September.

On the other hand, the main focus of the markets is on core inflation, which is excluding volatile items such as food and energy.

EXPECTATION FOR SLOWING DOWN IN CORE INFLATION

According to the survey, the monthly increase rate of core CPI is expected to decrease from 0.29 percent to 0.22 percent.

Annual core inflation expectation is at 2.4 percent.

Monthly core inflation forecasts of the institutions participating in the survey range between 0.16 percent and 0.24 percent.

While the lowest estimate comes from Deutsche Bank, Goldman Sachs, Barclays and Morgan Stanley predict a monthly increase of 0.24 percent.

About half of economists predict annual core inflation will rise to 2.5 percent, while the other half predict it will remain at 2.4 percent.

THE EFFECT IN AUGUST IS EXPECTED TO REVERSE

Analysts at Barclays and Morgan Stanley stated that the sharp price increase in wireless communication services in August contributed about 0.1 percentage points to core inflation.

Analysts expect this effect to partially reverse in September.

While the acceleration in headline inflation is considered to be largely reflected in market pricing, core inflation is expected to determine the main direction in asset prices.

HOW CAN GOLD, DOLLAR AND STOCK EXCHANGES BE AFFECTED?

If core inflation is in line with or lower than expectations, expectations regarding the Fed's new interest rate hikes may weaken.

In such a situation, a retreat in US bond interest rates and the dollar index may support ounce gold. If interest rate pressure decreases, risk appetite can be expected to increase in global stock markets, especially Wall Street.

If the core CPI exceeds expectations, the expectation that the Fed will maintain its tight monetary policy for a longer period of time or increase interest rates may become stronger.

In this scenario, the rise in the dollar index and US bond interest rates may create selling pressure on gold and stock markets.