Gold whipsawed on Thursday as traders tried to digest the latest US inflation numbers alongside a spate of central bank decisions.
Prices dipped immediately after the CPI release, falling to $4,308, before buyers stepped in and lifted spot gold back to $4,338 by 15:45 GMT.
November’s consumer price index rose 2.7% year-on-year, below expectations of 3.1% and down from September’s 3.0%. Core inflation, which excludes volatile food and energy costs, came in at 2.6%, also missing the 3.0% forecast. These are the first inflation figures released since October’s data was delayed by the government shutdown, leaving traders with a patchy picture of the economy.
Markets are weighing mixed signals. Inflation is lower than expected, yet it remains above the Federal Reserve’s target. Labour market readings are uneven, and the Fed’s ongoing asset purchases have raised questions about US liquidity. The combination of these factors has some investors worried about stagflation, a scenario where prices keep rising even as unemployment increases.
Those fears drove demand for gold and other precious metals, helping it recover from the initial drop. For now, gold is holding just under $4,350, waiting for the next catalyst that could push price through previous highs.
Updates
19:20 GMT – Gold has reversed, giving back earlier gains to trade back at $4,330.
16:18 GMT – Gold has pushed past $4,350 to trade at $4,370, on route to test all time highs.