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Gold prices holding above $1,800 but sees little traction as U.C. CPI rises 7% in December

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(Kitco News) - Gold prices are holding gains above $1,800 but is struggling to gain some bullish traction as consumer price pressures rise more than expected in December.

Wednesday, the U.S. Labor Department said its U.S. Consumer Price Index rose 0.5% in last month, after a 0.8% rise in November. The data beat consensus forecasts as economists were forecasting a 0.4% rise.

For the year, the report said that headline inflation rose 7.0%. Annual inflation rose in line with expectations. The report said that inflation is at its highest level since June 1982.

Meanwhile, core CPI, which strips out food and energy costs, increased 0.6% in December, up from a 0.5% increase in November. Economists were expecting to see an increase of 0.5%.

For the year, core inflation rose 5.5%, “the largest 12-month change since the period ending February 1991,” the report said.


This is the difference between gold price surging above $2k or plunging below $1,600 in 2022

The latest inflation data is having little impact on gold. Spot gold prices last traded at $1,819.60 an ounce, down 0.12% on the day.

Some analysts said that gold is not seeing much reaction to the latest inflation data because markets were expecting to see a much hotter report.

“The market was particularly fearful ahead of this report and that's coming out now with the numbers generally in-line with estimates (though a touch higher),” said Adam Button, chief currency strategist at Forexlive.com.

Katherine Judge, senior economist at CIBC said that the latest inflation data continues to support the Federal Reserve’s push to raise interest rates. Markets expect the U.S. central bank to raise interest rates as early as March and see four increases this year.

“Although supply chain issues will likely fade once omicron is behind us, the Fed will want to act to lean against escalating wage pressures and rising shelter inflation, and is therefore set to hike rates in March,” Judge said.

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