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Gold prices see modest drop following weak U.S. CPI numbers

Kitco News

Editor's Note: The article was updated to a reflect weaker prices in delayed reaction to the latest U.S. CPI data.

(Kitco News) - Gold prices are down on the day but holding on to gains above $1,500 an ounce as inflation pressures were weaker than expected last month

Thursday, the U.S. Labor Department said its U.S. Consumer Price Index was unchanged in September, after a 0.1% rise in August. The data missed expectations as consensus forecasts were calling for a 0.1% rise.

Annual headline inflation rose 1.7% last month, unchanged from August’s reading.

Stripping out volatile food and energy prices, core inflation rose slightly less than expected, increasing 0.1% in last month, following August rise of 0.3%. Economists were expecting to see a 0.2% rise.

For the year core inflation is up 2.4%, unchanged from August, the report said.

Gold prices were relatively unchanged on the day ahead of the report, but has lost some ground in a delayed reaction to the data.a December gold futures last traded at $1,506 an ounce down 0.45% on the day.

Although gold is finding little traction following the disappointing inflation data, some analysts have said that it prove to be positive news for the precious metal. Some analysts and economists explained that inflation data shows the Federal Reserve still has room to lower interest rates, which would be bullish for gold.

“When the Fed looks at this, they're going to see more signs of weakness than strength and it's another small reason to cut rates this month,” said Adam Button, managing director at

Wednesday, the minutes of the September Federal Reserve monetary policy meeting shows that many committee members supported a rate cut last month with an expectation that it will boost inflation to the central bank’s 2% symmetrical target.

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