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(Kitco News) – The gold market is holding strong price gains pushing above initial resistance at $ 1,850 an ounce, after mixed consumer inflation pressures in January.
On Wednesday, the US Department of Labor reported that its US Consumer Price Index rose 0.3% in January, after a 0.4% increase in December. The data are in line with consensus forecasts.
In the year, the report reports that full inflation rose 1.4%.
However, excluding volatile food and energy prices, core inflation was weaker than expected, with no changes in inflation since December. Economists had expected to see a 0.2% increase in consumer prices.
The unchanged reading last month caused core annual inflation to rise 1.4%, compared to December’s 1.6% reading, the report said.
Gold prices were in positive territory before the report and rose modestly in the initial reaction. Gold futures in April were last traded at $ 1,854.50 an ounce, up almost 1% on the day.
The report noted that higher gas prices were the biggest driver of inflation last month. The gasoline index rose 7.4% last month. The increase in gasoline prices came at a time when crude oil fell to more than $ 50 a barrel last month.
West Texas Intermediate (WTI) crude oil continued to rise in early February and is trading near its highest level in a year.
The report noted that higher gas prices were the biggest driver of inflation last month. The gasoline index rose 7.4% last month. The increase in gasoline prices came at a time when crude oil fell to more than $ 50 a barrel last month.
West Texas Intermediate (WTI) crude oil continued to rise in early February and is trading near its highest level in a year.
Although the latest CPI data is a mix for gold prices, economists and market analysts said that rising commodity prices, especially energy and good prices, are a sign that inflationary pressures are increasing.
Analysts also note that mild inflationary pressures will force the Federal Reserve to maintain its extremely accommodative monetary policies, which will continue to provide long-term support for gold and silver.
“A softer core reading of inflation supports the Fed’s dovish stance as it implies that core PCE prices, the Fed’s preferred price measure, were even below the 2% mark in January. While price pressures are expected to accelerate in the spring months, as the basic effects of the start of the pandemic amplify gains, this should be temporary, ”said Katherine Judge, senior economist at CIBC.
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