Gold Down, Investors Digest Latest U.S. Inflation Data

© Reuters.

By Gina Lee

AiVIF.com – Gold was down on Thursday morning in Asia but remained near the one-week high hit in the previous session. The U.S. dollar and Treasury yields retreated after U.S. inflation data highlighted the need for a quicker interest rate hike.

Gold futures inched down 0.07% to $1,826.05 by 11:18 PM ET (4:18 AM GMT). The dollar, which normally moves inversely to gold, inched up on Thursday.

U.S. benchmark 10-year Treasury yields retreated from the two-year highs hit earlier in the week.

Wednesday’s data showed that the U.S. core consumer price index (CPI) grew 0.6% month-on-month and 5.5% year-on-year in December. The CPI grew 7% year-on-year, the fastest pace since 1982, while growing 0.5% month-on-month.

The U.S. producer price index is due later in the day.

The higher-than-expected inflation print increased expectations that the U.S. Federal Reserve will hike interest rates at its March 2022 meeting, with three more increases over the year.

Supporting these expectations, Fed St. Louis President James Bullard told the Wall Street Journal that four rate increases may be justified in 2022 amid high inflation. Fed Bank of Cleveland President Loretta Mester and Atlanta Fed leader Raphael Bostic separately interest rate hikes as soon as March 2022.

Richmond Fed President Thomas Barkin, Philadelphia Fed President Patrick Harker, and Chicago Fed President Charles Evans are among the Fed officials speaking later in the day. New York Fed President John Williams will speak on Friday.

The U.S. Senate Banking Committee hearing for Fed vice-chair nominee Lael Brainard will also take place later in the day.

In Asia Pacific, the Bank of Korea will hand down its policy decision on Friday.

Meanwhile, Zimbabwean gold production rose by 55.5% in 2021, according to Wednesday’s data from the Reserve Bank of Zimbabwe.

In other precious metals, silver and platinum inched up 0.1%, while palladium edged down 0.2%.