Gold Slips As Analysts Anticipate Unfavorable Inflation Data

Gold prices slipped lower this week as the dollar stiffened, even as traders prepared for crucial US inflation data. Holding off on any major currency bets, traders are bracing for potentially distressing news that could greatly affect the Federal Reserve’s next rate-hike move.

Specifically, spot gold increased by 0.46% to $1,856.00 per ounce. US gold futures fared slightly better, with a dip of just 0.38%, to $1,867.40.

It is possible we could see a value shift again after the Fed releases updated US economic data this week. Investors and traders are particularly interested in January’s consumer price index report, which will be released on Thursday, February 16. Analysts expect this metric to climb 0.4% during the year’s first month. This will add to revised December numbers, indicating that consumer prices rose in December, contrary to what was originally estimated.

Analysts confide that gold appears reluctant to grow at this somewhat unstable time. With stubborn inflation looming, these persistently elevated levels could likely continue to soften gold, at least for a little while. However, if inflation softens—hopefully soon—it could ease tension at the Fed, eventually leading to a pause in rate hikes. That would be a much-needed reprieve from years of consecutive rate hikes. More importantly, it could help shore up any weakness and push gold up toward the $2,000 level.

This is a crucial time, as global money markets anticipate that the US central bank will peak its target rate at 5.188% in July. With that in mind, it could be at least six months before we start to see that gold value jump. And during that time, gold-holding strategies might create more opportunities for non-yielding bullion, at least for a little while.

On a similar note, silver prices are also down. In fact, this precious metal is now down to its lowest value in nearly three months. Specifically, spot silver fell by 0.18% to $21.9531 an ounce. Platinum futures are somewhat hovering around $945. Alternately, palladium futures are up +6.60% to $1,531.50.