April CPI Outlook: CPI Report May Hide "Bombshells," Four Major Trends You Must Be Aware Of!

At 20:30 Beijing time, the US will release its April CPI data. Although the US-China trade truce (both sides agreed to cut tariffs by 115% within the next 90 days) has completely reshaped the macro landscape, rendering the before-and-after comparison of CPI data meaningless, the market may still react reflexively to the upcoming CPI data—even if it is just a brief fluctuation, followed by the "Trump roar" (Trump often posts comments after key data releases).

Wall Street expects:

Goldman Sachs forecasts in its report that the overall CPI will rise 0.31% MoM, reflecting increases in food and energy prices (energy up 0.4% MoM, food up 0.3% MoM). The bank highlights four major trends expected in this month's report:

Auto prices. Similar to Deutsche Bank, Goldman Sachs expects used car prices to fall 0.5% MoM in April, reflecting a decline in used car auction prices. The bank also expects new car prices to rise 0.1% MoM, reflecting a reduction in dealer sales promotions in April, possibly related to anticipated tariffs.

Tariffs. This is the most significant point: Goldman Sachs expects tariffs to exert a mild upward pressure on categories particularly vulnerable to their impact, contributing +0.06 percentage points to the monthly core inflation rate. The bank expects that prices for clothing (+0.8%), furniture (+0.3%), education (+0.4%), and communications (+0.3%) may rise in April due to tariffs, and notes that there may also be some indirect price increases in the report as consumers purchase other goods (such as new cars and alcoholic beverages) in advance.

Health insurance. The April CPI report will incorporate the semi-annual update of raw data for the health insurance component. Goldman Sachs expects that this update will lead to negative health insurance inflation over the next six months (with an expected monthly rate of -0.5% in April). The PCE index uses different raw data to measure health insurance, so this update will not affect PCE inflation.

Looking ahead, Goldman Sachs believes that tariffs will continue to hinder the progress of inflation returning to 2% unless investors see retailers, who previously stockpiled inventory in response to the US-China trade conflict, selling off their stockpiles. It is worth noting that they do not anticipate a 90-day truce agreement between the US and China.

Goldman Sachs also expects that the monthly core CPI rate will be around 0.35% in the coming months. This forecast also reflects accelerated increases in most core goods categories, but will have limited impact on core services inflation, at least in the short term.

Fxstreet analyst Dhwani Mehta stated that if CPI data unexpectedly rises, it will further strengthen market expectations for a renewed hawkish stance from the US Fed, thereby boosting the US dollar's gains and potentially exacerbating a new round of declines in gold. On the other hand, if US CPI growth unexpectedly slows, it may reignite market expectations for more than two interest rate cuts by the US Fed this year, providing support for gold.

Technically, gold's daily closing price on Monday fell below the 21-day SMA, which was then at $3,313, opening up space for further declines. The 14-day RSI also closed below the midline for the first time since early April, turning bearish. The current RSI is hovering around the midline at 49, with bulls attempting to regain control.