Gold deteriorates below 2015 after US CPI data

Gold prices have been volatile due to high price pressures in the United States in December, and investors seem confident about the Federal Reserve reducing interest rates in March. The precious metal is trading at $2014.69 at the time of writing.

The United States Bureau of Labour Statistics reported hotter-than-projected Consumer Price Index (CPI) data for December, with annual headline inflation accelerating to 3.4% against expectations of 3.2% and the former reading of 3.1%.

The core CPI, which excludes volatile food and oil prices, remained higher than expectations but lower than the prior release of 4.0%. Monthly headline and core inflation grew by 0.3%.

Investors’ bets on Fed’s March interest rate cut may decrease due to higher inflation data. Fed policymakers remain cautious, denying early rate cuts. Fed officials Raphael Bostic and John Williams advocate for maintaining higher interest rates, stating more work is needed to restore inflation to the 2% target.

Earlier on the day, Gold price traded volatile around $2,030 as US inflation data for December remains higher-than-projected. The Fed is highly expected to keep interest rates unchanged in the range of 5.25%-5.50% in January’s monetary policy meeting for the fourth time in a row. Guidance about upcoming interest rate cuts will be of utmost importance.

Now, investors are shifting focus towards the Producer Price Index (PPI) data for December, which will be published on Friday. US Treasury Secretary Janet Yellen said that former Republican President Donald Trump’s plan to levy universal 10% tariffs on all imports would escalate costs for consumers and called for a review of tariffs on Chinese imports.