Early forecasts by economists expected that the headline consumer price index, which includes healthcare, housing costs, energy, as well as food to rise by 3.1% in February, the numbers came in above that at 3.2% year-over-year. However, more worrisome was the forecast of the core CPI which strips out volatile items like energy and food which was expected to show an increase of 0.4% month over month well above January’s inflation numbers which showed inflation increased month over month by 0.3%.

Because the forecast for the upcoming CPI reflected that inflation would continue to run hot the identification of a doji candle identified in the dollar index on Friday, and gold yesterday were significant because they can be a signal of an imminent key reversal.

Today the Bureau of Labor Statistics released the most current information on inflationary data from February. “The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in February on a seasonally adjusted basis, after rising 0.3 percent in January, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased by 3.2 percent before seasonal adjustment.

The index for shelter rose in February, as did the index for gasoline. Combined, these two indexes contributed over sixty percent of the monthly increase in the index for all items. The energy index rose 2.3 percent over the month, as all of its component indexes increased. The food index was unchanged in February, as was the food at home index. The food away from home index rose 0.1 percent over the month.”

Doji Signals: Gold’s Decline and Dollar’s Rise

Because the report revealed inflation was running even hotter than the forecast by economists’ gold dropped significantly because the report raised questions about whether the Federal Reserve would initiate its first rate cut by June. This also caused the dollar to trade higher, as a byproduct of treasury yields increasing.