- The price of gold advances after the publication of a weak report on the US CPI.
- The core US Consumer Price Index (CPI) for the month of October falls, suggesting that the Fed could slow down the pace of rate hikes.
- Claims for jobless benefits in the US increased, showing signs of relaxation.
the price of gold rallied after a report on US inflation showed prices easing, opening the door for less aggressive action by the Federal Reserve at its December meeting. That said, investors’ risk appetite improved as US equity futures rose while US Treasury yields fell. At the time of writing, XAUUSD is trading around $1,739, up nearly 2% since opening.
Gold rises strongly after the US CPI report.
On Thursday, the US Department of Labor reported that the Consumer Price Index (CPI) for October rose 0.4% month-on-month, less than the estimated 0.6%, while the year-on-year reading was 7.7%, by below the 7.9% expected. For its part, the core CPI, which is closely watched by Federal Reserve officials, rose 0.3% month-on-month, less than the 0.5% expected by analysts, and the year-on-year figure was 6.3%, lower than the estimates of the 6.5%.
At the same time, US initial jobless claims for the week ending November 5 rose by 225,000, above estimates of 220,000, signaling that the labor market is easing, while continuation requests rose to 1,493,000 from 1,487,000 in the previous reading. During last week’s employment data, the US economy added 261,000 jobs, beating estimates, but the unemployment rate was closer to 3.7%.
Following the release, US Treasury yields are falling, with the US 10-year Treasury yield at 3.912%, down 18 basis points, a headwind for the dollar. The Dollar Index, which measures the value of the dollar against a basket of six currencies, is down 1.47% to 108,819.
At the time of typing, Philadelphia Fed President Patrick Harker is giving remarks, saying the Fed’s dovish policy stance is seen above 4% and adding that rate hikes could make a Pause when the Federal Funds Rate (FFR) hits 4.5%. Harker said monetary policy is “a year or so” behind schedule.
Key Technical Levels for Gold (XAUUSD)
Source: Fx Street
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