Gold prices rose on Thursday after the US Bureau of Labor Statistics released its latest inflation report. The report showed that consumer prices rose more than expected in January, with the Consumer Price Index (CPI) increasing by 0.4% compared to the previous month. The increase was driven by a jump in energy prices, which rose by 4.6%.
The increase in gold prices was also supported by a weaker US dollar. The US Dollar Index, which tracks the value of the US dollar against a basket of other major currencies, fell to its lowest level in more than two weeks. A weaker dollar makes gold more attractive to investors as it is priced in US dollars.
Gold prices have been on a strong uptrend in recent weeks, with prices rising more than 8% since the start of the year. The uptrend has been driven by a number of factors, including the US-China trade deal, which has reduced some of the uncertainty surrounding global trade. In addition, central banks around the world have been cutting interest rates, which has reduced the opportunity cost of holding gold.
The latest US inflation report has added to the bullish sentiment in the gold market. With inflation still below the Federal Reserve’s target, it is unlikely that the central bank will raise interest rates in the near future. This could keep gold prices supported in the near term.
Gold prices could also be supported by ongoing geopolitical tensions. The US-Iran conflict and the US-China trade dispute are both ongoing, and could lead to increased safe-haven demand for gold. In addition, the coronavirus outbreak in China could lead to a slowdown in global growth, which could also boost demand for gold.
Overall, the latest US inflation report has been seen as positive for gold prices. With inflation still below the Federal Reserve’s target and ongoing geopolitical tensions, gold could remain supported in the near term. However, investors should keep an eye on any developments in the US-China trade dispute and the coronavirus outbreak in China, as these could have an impact on gold prices.
