Gold Prices Fall After U.S. Inflation Data Release.

(CTN News) – Gold prices experienced a slight decline on Tuesday following the release of data indicating an unexpected rise in U.S. consumer prices in November.

Traders are now shifting their focus to upcoming central bank policy meetings to gain further clarity on the future of monetary policy.

As of 10 a.m. ET (1500 GMT), spot gold remained steady at $1,981.19 per ounce, after initially rising by about 0.5% before the data release. Meanwhile, U.S. gold futures saw a modest increase of 0.1% to reach $1,996.10.

The consumer price index (CPI) for November showed a 3.1% annual increase, aligning with economists’ expectations.

On a month-on-month basis, the CPI rose by 0.1% in November. Phillip Streible, the chief market strategist at Blue Line Futures in Chicago, noted that while the inflation data was in line with expectations, a significant decrease would have been necessary to solidify expectations of interest rate cuts.

Streible also mentioned that gold prices are likely to remain within the range of $1,950 to $2,050, with the potential for an increase due to weak economic data and geopolitical tensions.

The focus now turns to the Federal Reserve’s two-day monetary policy meeting, which will conclude on Wednesday with the release of its interest rate decision and summary economic projections.

The Federal Reserve is widely anticipated to maintain current interest rates this week, while there is a high probability of a rate reduction in May, according to the CME FedWatch Tool.

This expectation of lower rates typically benefits gold, which does not yield any interest. In the event of a recession, the weakening of the dollar could further drive up the price of gold, potentially reaching new highs within the range of $1,880 to $2,250, as predicted by Heraeus Metals in their 2024 outlook.

However, the recent release of CPI data led to a partial recovery of the dollar’s losses, making gold relatively more expensive for holders of other currencies. Additionally, traders will closely monitor the policy meetings of the European Central Bank.

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Japan’s Wholesale Inflation In November Slowed As Cost Pressures Eased.