Gold prices testing resistance just below $5,000 as US inflation cools in January

Kitco Media
By Neils Christensen
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Gold prices testing resistance just below $5,000 as US inflation cools in January teaser image

(Kitco News) - The gold market is seeing some renewed momentum and testing resistance back at $5,000 an ounce as inflation pressures appear to be easing, giving the Federal Reserve room to cut interest rates later this year.

The Consumer Price Index (CPI) rose by 0.2% in January, following a 0.3% increase in December, the U.S. Bureau of Labor Statistics announced on Tuesday. The inflation numbers were slightly cooler than expected as economists looked for a 0.3% increase.

However, annual inflation rose 2.4%, down sharply compared to the 2.7% increase reported in December. According to consensus forecasts, economists expected a 2.5% increase in the last 12 months.

The report also noted that core inflation, which strips out volatile food and energy prices, is not accelerating, an indication that higher prices have not become embedded in the broader economy. Core CPI rose 0.3%, following a 0.2% increase in December. Core inflation rose in line with economists’ forecasts.

Annual core inflation rose 2.5% in January, unchanged from December’s reading.

The gold market has managed to catch a small bid in its initial reaction to the latest inflation data. Spot gold last traded at $4,987.89 an ounce, up more than 1% on the day.

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Neils Christensen

Neils Christensen has a diploma in journalism from Lethbridge College and has more than a decade of reporting experience working for news organizations throughout Canada. His experiences include covering territorial and federal politics in Nunavut, Canada. He has worked exclusively within the financial sector since 2007, when he started with the Canadian Economic Press. Neils can be contacted at: 1 866 925 4826 ext. 1526 nchristensen at kitco.com @KitcoNewsNOW

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