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Gold continues to shine as US inflation cools

Gold prices continued to rally this morning after lower-than-expected US inflation data for October reduced expectations for further interest rate hikes by the Federal Reserve. The headline consumer price index rose 3.2% year-over-year, below estimates …

Gold prices continued to rally this morning after lower-than-expected US inflation data for October reduced expectations for further interest rate hikes by the Federal Reserve.

The headline consumer price index rose 3.2% year-over-year, below estimates of 3.3%. The core CPI, which excludes volatile food and energy prices, was up 4% annually versus forecasts of a 4.1% increase. Prices were unchanged from September on a monthly basis, the slowest pace since July.

As inflationary pressures ease, the US dollar and Treasury yields declined, boosting the appeal of non-interest-bearing assets like gold. Spot gold traded at $1,971.51 per ounce by 08:35 GMT, extending recent gains.

While price growth remains above the Fed’s 2% target, the latest figures have prompted discussion of a potential “soft landing” for the economy. However, analysts believe the central bank will now pause its rate hike campaign.

“We’re happy to see both headline and core CPI come in lower than expected. It’s telling us that the Fed is done; there’s nothing left for it to do here,” said Thomas Hayes of Great Hill Capital.

The cooling inflation data reduces the chances of another rate increase in the near term, providing further support for gold prices.

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