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(Kitco News) – The gold market retains strong gains as prices break initial resistance at $ 1,850 an ounce, following mixed consumer inflation pressures in January.
On Wednesday, the US Department of Labor said its US consumer price index rose 0.3% in January, after rising 0.4% in December. Data in line with consensus forecasts.
For the year, the report says headline inflation rose 1.4%.
However, excluding the volatility of food and energy prices, core inflation was lower than expected, with no change in inflation from December. Economists expected a 0.2% rise in consumer prices.
The unchanged reading last month pushed up core annual inflation 1.4%, down from the December reading of 1.6%, according to the report.
Gold prices were in positive territory before the report and edged up slightly in the initial reaction. April gold futures last traded at $ 1,854.50 an ounce, up nearly 1% on the day.
The report notes that rising gasoline prices were the main driver of headline inflation last month. The gasoline index rose 7.4% last month. The rise in gasoline prices came as crude oil pushed back above $ 50 a barrel last month.
West Texas Intermediate (WTI) crude oil continued to climb until early February and is trading near its highest level in a year.
The report notes that rising gasoline prices were the main driver of headline inflation last month. The gasoline index rose 7.4% last month. The rise in gasoline prices came as crude oil pushed back above $ 50 a barrel last month.
West Texas Intermediate (WTI) crude oil continued to climb until early February and is trading near its highest level in a year.
While the latest CPI data shows a mixed return for gold prices, economists and market analysts have said that rising commodity prices, especially energy and good prices, is a sign that inflationary pressures are increasing.
Analysts also note that moderate 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.
“The lower reading on core inflation supports the Fed’s dovish stance, as it implies that core PCE prices, the Fed’s preferred price measure, were even further below the 2% mark in January. As price pressures are expected to accelerate in the spring, as the base effects of the onset of the pandemic amplify the gains, this should prove temporary, ”said Katherine Judge, senior economist at CIBC.
Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept guilt for any loss and / or damage resulting from the use of this publication.
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