Gold Extends Gains After US Inflation Rises Less Than Forecast
Gold extended gains after a key inflation report showed price pressures rose less than expected in December, boosting expectations that the Federal Reserve will be able to cut interest rates this year.
The so-called core consumer price index — which excludes food and energy costs — increased 0.2% after rising 0.3% four straight months, Bureau of Labor Statistics figures showed Wednesday. From a year ago, it rose 3.2%. Economists see the core gauge as a better indicator of the underlying inflation trend than the overall CPI that includes often-volatile food and energy costs.
The easing came after months of faster underlying inflation that prompted the Fed to signal a pause in lowering borrowing costs. Treasury yields and the dollar slipped right after the economic readings, helping sending bullion higher by as much as 0.6%. Lower rates typically benenfit the precious metal as it pays no interest. Swap traders now price in a July cut compared with previous expectations of a September cut.
Spot gold added 0.4% to $ 2,689.28 an ounce as of 8:54 a.m. in New York. Silver, platinum and palladium gained.
Source: Bloomberg
