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Gold Prices Unchanged Following In-Line CPI Data

Kitco News

(Kitco News) - Gold prices remain on the back foot, unchanged on the day and trying to hold above critical psychological support at $1,200 an ounce following in-line consumer inflation data last month.

Wednesday, the U.S. Labor Department said its U.S. Consumer Price Index rose 0.3% in October, after increasing 0.1% in September. The data was in line with consensus forecasts. For the year, headline inflation rose 2.5%. According to reports, this is the biggest increase in consumer inflation in nine months.

Monthly core inflation, which strips out volatile food and energy costs, rose 0.2%, following a 0.2% increase in May. Economists were expecting to see a 0.2% rise in price pressures.

Gold prices have struggled to find momentum as the U.S. dollar has dominated financial markets recently rising to its highest level since June 2017.  Comex December gold futures last traded at $1,202.60 an ounce, relatively flat on the day. Annual core inflation was slightly weaker than expected, rising 2.1%, compared to September's increase of 2.2%.

While rising inflation is positive for gold in the long-run, analysts have noted that the yellow metal could suffer in the near term as the data supports further interest rate hikes from the Federal Reserve.

According to the report gasoline had the biggest impact on consumer inflation last month, according for one-third of the increase in headline inflation.

Last month the energy index rose 2.4% and increased 8.9% for the year. However, some economists are quickly dismissing the rise in energy prices as oil has dropped sharply since early October. In just over a month oil prices have dropped more than 20% after hitting a four-week year high.

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