How US Inflation Affects Stock Markets and Gold Prices - Analysis by a Financial Expert

How US Inflation Affects Stock Markets and Gold Prices - Analysis by a Financial Expert

According to a report by finanzmarktwelt.de,

US inflation has turned out to be higher than expected, leading to a negative reaction in stock markets and gold. Markets reacted immediately to the release of US inflation data in December. The Dow Jones recorded a loss of 100 points, the Nasdaq lost 80 points and the Dax lost 50 points. Gold fell from $2,037 to $2,025. This decline is a direct response to higher-than-expected US inflation.

The higher inflation means the likelihood of an imminent rate cut by the Federal Reserve is decreasing because inflation is more stubborn than expected. This leads to a dampening of the euphoria in the stock markets and an increased attractiveness of gold for investors given the slowing prospect of interest rate cuts. The markets reacted to this information as early as 2:30 p.m.

Commerzbank experts say that postponing the first interest rate cut to a later date could have a negative impact on share prices. This assessment could prove true in the coming days and weeks as markets react to further data and developments. Additionally, the CME Fed Watch Tool shows a reduced probability of a rate cut in March, which could also reflect the Fed's future decisions.

Overall, higher-than-expected US inflation has led to a shift in interest rate cut expectations, which has a direct impact on stock markets and gold prices. However, the exact development in the coming days and weeks remains to be seen and will be influenced by further data and decisions from the Fed.