Gold price recovers ahead of China’s CPI

In the early Asian session on Friday, the price of gold rises from the weekly low of $2,013 to $2,030. The chance that the Fed would not start lowering interest rates as soon as anticipated, however, might restrict the upside of the yellow metal and put some selling pressure on gold prices.

In the meanwhile, the US Dollar Index increases to 102.30. With the 10-year yield at 3.97%, US Treasury rates are gradually rising.

On Thursday, the US inflation report exceeded expectations. The US Consumer Price Index (CPI) for December exceeded expectations by rising 3.4% YoY from the prior figure of 3.1%. Monthly growth in the headline CPI was 0.3% as opposed to 0.1% previously, exceeding the 0.2% consensus estimate.

Compared to the estimate of 3.8%, the Core CPI, which does not include volatile food and energy costs, increased 3.9% YoY in December.

Following the positive US data, the US Dollar gains some buyers as futures traders believe the Fed may postpone its first interest rate cut.

According to Chicago Fed President Austan Goolsbee, 2023 was a “hall-of-fame” year for declining inflation on Thursday. If this trend persisted, this would pave the way for a few interest rate cuts in the US in 2024. John Williams, the president of the New York Fed, noted that the “restrictive” monetary policy will probably remain in effect for a while.

On Friday, the economic data from China will provide investors with additional insights. The country’s Producer Price Index (PPI) is predicted to decline 2.6% YoY from 3.0% in the previous reading, while the Consumer Price Index (CPI) is expected to decline 0.4% YoY in December.

Considering that China is one of the biggest purchasers of gold worldwide, the less-than-expected figures could be detrimental to the yellow metal. Later on Friday, the US PPI will also be made public.