(RTTNews) – The price of gold has seen a significant uptick in trading on Friday, following a sharp decline seen in the previous session.
Gold for delivery in February rose $109, or 2.2 percent, to $5,032.70 an ounce, after falling $147.90, or 2.9 percent, to $4,923.70 an ounce in the previous session. With the bounce, gold has turned positive this week.
The sharp rise in gold prices came after the release of the Labor Department’s much-awaited report on consumer price inflation in the month of January.
The report shows that consumer prices rose slightly less than expected on a monthly basis, while the annual growth rate slowed more than expected.
The Labor Department said its consumer price index rose 0.2 percent in January after climbing 0.3 percent in December. Economists had expected prices to rise another 0.3 percent.
The annual growth rate of consumer prices slowed to 2.4 percent in January from 2.7 percent in December, below estimates of 2.5 percent.
Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, rose 0.3 percent in January after rising 0.2 percent in December, in line with expectations.
The annual growth rate of core consumer prices slowed to 2.5 percent in January from 2.6 percent in December, which was also in line with estimates.
The weaker-than-expected headline inflation data has led to some new optimism about the outlook for interest rates and the continued decline in Treasury yields.
“This print strengthens the case that the Federal Reserve can gradually reduce bias without fear of new inflationary pressures,” said Daniela Hathorn, senior markets analyst at Capital.com.
“Importantly, given that the labor market remains resilient, today’s CPI reduces the risk that strong employment data forces the Fed to reconsider its stance,” he said.
Nevertheless, there are still widespread expectations for the Federal Reserve to leave interest rates unchanged over the next few months before resuming rate cuts at the end of the year.
Gold may also benefit from slight weakness in the value of the US dollar, with the US dollar index falling 0.1 per cent.
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