Gold News

Gold Price Sinks to Test $2000 on Strong US Inflation Data

The PRICE of GOLD sank against a surging Dollar on Tuesday, dropping to test the $2000 level but holding firmer against non-US currencies as new data said inflation isn't slowing as expected in the world's largest economy.
The gold price sank $25 inside 20 minutes of today's US Consumer Price Index release, hitting a 4-week low of $2002 per Troy ounce.
Chart of gold priced in Dollars Source: BullionVault
The US cost of living rose 3.1% in January from 12 months before, the Bureau of Labor Statistics said, beating forecasts of a 0.5-point slowdown from December's figure to 2.9%.
Excluding fuel and food, inflation on the so-called 'core' CPI measure held unchanged at 3.9%.
Betting on a March rate cut from the Federal Reserve evaporated on the news, dropping to barely 1-in-20 positions in CME futures contracts after peaking above 9-in-10 at the turn of the year.
Longer-term interest rates meantime jumped as bond prices sank with gold, taking the yield offered by 10-year US Treasury debt up to 4.27% per annum, the highest since the start of December.
Gold prices also fell for non-Dollar investors but less steeply, hitting 2-week low in Euros and the British Pound.
Having predicted in December that they will cut rates 3 times in 2024, Fed officials have since stressed the need for "patience" before reducing the cost of borrowing from today's 2-decade high.
Fed governor Michelle Bowman said yesterday she doesn't believe rates cuts would be " the immediate future", preferring to keep downward pressure on inflation.
Other Fed officials have meantime begun saying they want to see disinflation in housing and rental costs on top of goods and services.
Silver prices also fell but unlike gold it hit only a 1-week Dollar low at $22.39 per Troy ounce.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver, platinum and palladium market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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