NEW YORK: Gold gained on Wednesday after an inflation print came in line with expectations, boosting the likelihood of a Federal Reserve rate cut next week, while investors awaited US Producer Price Index (PPI) data for further direction on monetary policy.
Spot gold climbed 0.7% to $2,713.29 per ounce, as of 11:00 am ET (1600 GMT). Spot prices for bullion hit a record high of $2,790.15 an ounce on Oct. 31. US gold futures rose 1.4% to $2,756.00.
The US consumer prices rose 0.3% on a monthly basis in November, data from the Labor Department showed. Annually, it climbed 2.7% after increasing 2.6% in October. Economists polled by Reuters had forecast the CPI rising 0.3% and advancing 2.7% year-on-year.
“Gold is higher on the back of the premise that CPI data coming in benign or certainly in line with expectations, inflation not rising any further but remaining steady will allow the Fed to almost certainly cut rates at the next FOMC meeting,” said David Meger, director of metals trading at High Ridge Futures.
Traders predict a 96% chance of a further 25-basis-point cut at the Fed’s Dec. 17-18 meeting, compared with an about 86% chance seen before the inflation report, CME’s FedWatch Tool showed. All eyes are now on the PPI data, due on Thursday for further clarity on Fed rate cut path.
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