(Kitco News) - Gold prices are holding within striking distance of $2,700 an ounce, as stubborn inflation fails to drive investors out of the marketplace.
The Consumer Price Index (CPI) rose 0.3% last month after October’s 0.2% rise, the U.S. Bureau of Labor Statistics announced on Wednesday. The inflation data was in line with expectations.
The report stated that, in the 12 months leading to October, headline inflation rose 2.7%, also in line with expectations and up from September’s 2.6% print.
Core CPI, which excludes volatile food and energy prices, increased 0.3% in November, matching expectations and mirroring September’s 0.3% reading.
The report also noted that annual core inflation rose by 3.3% last month, unchanged from October’s reading and consistent with expectations.
Although inflation has moved higher, there were no major surprises to unsettle investors. The gold market is seeing some modest buying but remains close to neutral territory. Spot gold last traded at $2,697.90 an ounce, up 0.15% on the day.
While inflation remains a concern, economists note that the data contained no major surprises that would deter the Federal Reserve from cutting interest rates next week. However, uncertainty surrounding the easing cycle in 2025 continues to grow.
"Risks around the monetary policy outlook are set to become increasingly two-sided in the first quarter of next year. Chiefly, policymakers will be concerned about the potential upside inflation risks stemming from incoming President Trump's tariff plans, as well as the broader reflationary fiscal stance, whereby strong demand could further fuel price pressures,” said Michael Brown, Senior Market Researcher at Pepperstone.
"On the whole, the pace of policy normalization is likely to be much slower in 2025, with the FOMC plotting a more deliberate course as rates move closer to a neutral level, likely around 3%," he added.
