PLN: Zloty Holds Steady, POLGB Auction Takes Focus

• Gold gains close to $30 in the past Hour, no suggestions of Margin Call flows given that the move has been gradual but is gaining some traction.
• Next Obvious resistance for the precious metal is at the $3800.00 handle.
• Silver should also be watch as the metal look to test the August 2011 high situated at 44.2175.

Question from MNI Policy Team on the impact of food prices/policy changes on inflation expectations.

A: In the short-term surveys, household expectations often follow CPI, and in particularly food prices. For sure it’s something we should monitor. Over the long term, for various groups the link with food prices is smaller.

• Inflation expectations could fall when the VAT cut pushes down food prices.
• It makes it a little bit tricky, because it could impact inflation expectations downward. I don’t judge this to be a big effect, but it could be so.