Gold on the Rise: U.S. Inflation Data Revives Interest Rate Cut Fantasies

The recent US inflation data has buoyed the gold market after a surprising slowdown in price increases reignited expectations for a Federal Reserve rate cut this year. The gold price hovered around the $2,695 per ounce mark, which is close to the highest level of the month. The so-called core consumer prices, which exclude food and energy costs, rose by only 0.2% after four months of 0.3% increases. This development suggests that the US central bank might consider easing monetary policy sooner than expected. This led to a decline in government bond yields and a weaker US dollar, making gold more attractive as a non-interest-bearing investment. The market is now firmly expecting a rate cut by July, after robust labor market data had previously pushed expectations towards September or October. Numerous Federal Reserve officials expressed confidence on Wednesday that price pressures would continue to ease but cautioned that the fight against inflation is not yet won. The easing of monetary policy was a significant factor in the precious metal's surge last year. The spot price for gold changed little and stood at $2,695.06 per ounce. Silver maintained its previous day's 2.5% increase, while platinum and palladium remained unchanged.