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Gold gains as U.S. consumer prices rise in December

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(Kitco News) Gold moved towards daily highs after December's inflation data showed that the U.S. consumer prices increased.

The U.S. Consumer Price Index rose 0.4% last month after advancing 0.2% in November, the U.S. Labor Department said on Wednesday. Consensus forecasts were not disappointed as they were calling for a rise of 0.4%.

Annualized inflation came in above expectations in December, rising 1.4% versus the projected 1.3%. This comes after November’s increase of 1.2%.

In an immediate reaction to the report, gold prices rose towards daily highs, with February Comex gold futures last trading at $1,859.20, up 0.83% on the day. 

Monthly core inflation, which strips out volatile food and energy costs, came in as expected, up 0.1% in December, following a 0.2% advance in November. Annualized core inflation also met expectations, coming in at 1.6% after registering the same advance during the previous month. 

Breaking down consumer prices for December, the gasoline index led the gains, up 8.4%, the report said. Also, food prices increased, with the food at home index and the food away from home index both rising 0.4%.

The December data was mostly in line with market expectations, and no big surprises are likely in the next few months, said CIBC Capital Markets economist Katherine Judge.

“While some services that are impacted by social distancing could see softness in prices in the months ahead, advances in other categories are expected to provide an offset,” Judge said.

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