Gold Gains As Hot US Inflation Report Feeds Fed Tightening Path
(Bloomberg) -- Gold climbed after hotter-than-expected US inflation fueled expectations the Federal Reserve will maintain a path of aggressive interest-rate hikes.
The core consumer price index, which excludes food and energy, increased 0.6% from a month earlier and 6.2% from April 2021, exceeding the median forecasts of economists. Treasury yields spiked following the print, while the dollar initially rallied before giving up its gains. Spot gold fluctuated.
“After investors digested the latest inflation report, the overall takeaway is that it still won’t change Fed policy over the short-term and considering how bad gold has been beaten up over the past few weeks, prices appear to be finding some support here,” said Ed Moya, senior market analyst at Oanda.
Bullion has been under pressure as the Federal Reserve tightened monetary policy to fight accelerating consumer-price gains. That helped push bond yields higher and has propelled a gauge of the US currency up around 6% since the end of March, weighing on gold.
Gold was up 0.8% at $1,852.69 an ounce at 2:08 p.m. in New York, after earlier rising as much as 1.1%. Bullion for June delivery gained 0.7% to settle at $1,853.70 on the Comex. The Bloomberg Dollar Spot Index slipped 0.1% after advancing as much as 0.2% earlier in the session. Silver and platinum gained, while palladium fell.
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