Gold prices are experiencing renewed selling pressure, hovering near session lows as U.S. inflation data aligns with market expectations.
The U.S. Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index (CPI) increased by 0.2% last month, consistent with August’s rise of 0.2%. The latest figures were in line with forecasts.
Over the past year, consumer prices have moderated significantly, rising by 2.5%, down from August’s 2.9%. This figure was slightly below economists’ expectation of a 2.6% increase.
However, core CPI, which excludes volatile food and energy prices, rose by 0.3% in September, exceeding the anticipated 0.2% increase. Annual core inflation also rose by 3.2%, meeting expectations.
The gold market reacted to the inflation report with renewed selling pressure. December gold futures were last seen trading at $2,536 per ounce, marking a decline of 0.28% for the day.
Market analysts suggest that the moderating inflation pressures could reduce the need for the Federal Reserve to implement aggressive interest rate cuts. Expectations for a 50-basis point reduction next week continue to diminish.
Paul Ashworth, Chief North America Economist at Capital Economics, noted, “While inflation appears to have been successfully tamed, housing inflation has not moderated as quickly as hoped. This suggests the Fed will likely adopt a cautious approach to interest rate cuts.”
Chris Zaccarelli, Chief Investment Officer at Independent Advisor Alliance, observed that the Fed now has the opportunity to implement a 25-basis point cut. “While some may be disappointed by the lack of a lower-than-expected inflation reading, which could have allowed for a larger cut, most Fed officials have indicated a preference for a gradual approach rather than a substantial reduction,” he said.
