The price of precious metal rose 0.9% to $1,895.35 per ounce, after reach US$1,905 during the day, its highest level since last May 5 (US$1,910.20).
The US dollar fell to nearly nine-month lows against the euro on Thursday, This makes gold more attractive to holders of other currencies.
The data showed that in December prices fell unexpectedly for the first time in more than two and a half years. The consumer price index (CPI) fell 0.1% last month, marking the first decline since May 2020, when the economy was reeling from the first wave of COVID-19 infections.
Price pressures are easing as US central bank’s fastest monetary policy tightening cycle since the 1980s dampens demand and bottlenecks in supply chains are alleviated. “Three months of relatively subdued core inflation numbers are starting to trend (…) which could prompt the Fed to further slow the pace of tightening on February 1”said Sal Guatieri, chief economist at BMO Capital Markets.
Although gold is considered a hedge against inflation, higher rates increase the opportunity cost of holding bullion, which does not earn interest.
Following the CPI release, the dollar hit $1.0845 against the euro, its lowest level since April 25. The euro continues to find support in hardline messages from European Central Bank officials, four of whom on Wednesday called for further rate hikes. The dollar was down 0.34% against the euro at $1.0796 by 1415 GMT and 0.3% against the pound at $1.2187. The US dollar index was down 0.407% at 102.7, its lowest level since June 9.
The greenback hit a 6.5-month low against the Japanese yen, which had been boosted by a Yomiuri report saying the Bank of Japan will review the side effects of its monetary easing at its next meeting. week and could take more steps to correct distortions in the yield curve. The dollar was down 1.75% against the yen, settling at 130.2 yen to the dollar.
Among other precious metals, Silver was up 2% at $23.96 an ounce, but platinum was down 0.5% at $1,077.
Source: Ambito
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