↑ CPI rises → Gold rises ↑Source: US inflation data·Monthly · ~2 week lag
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What is the CPI?
The CPI (Consumer Price Index) measures how much more expensive everyday things are getting compared to a year ago. If CPI is 3.3%, that means on average, prices are 3.3% higher than last year. The Federal Reserve targets 2% — above that, inflation is considered too high.
How does it affect gold?
↑ Rule: When CPI rises → gold tends to rise
Gold is the original inflation hedge. When prices rise faster than expected, people buy gold to protect their purchasing power — because gold holds its value while paper money loses it.
High CPI → investors worry inflation is out of control → they buy gold → gold price rises.
But it's more nuanced: what really matters is whether inflation is *surprising* the Fed. Unexpected inflation spikes are more bullish for gold than inflation the Fed has already priced in.