Inflation data adds uncertainty to the next step of Fed
The latest report of the US Consumer Price Index (CPI) showed a monthly increase of 0.5% in January, which exceeds 0.3% forecast. Inflation on an annual basis rose to 3%, while the CPI core climbed to 3.3%.
This data reinforces the expectations that the Federal Reserve will maintain increased interest rates that can limit the Gold meeting. Higher rates often increase the yields and dollars, making gold less attractive.
Traders are now waiting for the release of Thursday producer Price Index (PPI) for further insights into inflation trends. A higher than expected PPI could strengthen the dollar and weigh gold prices, while weaker data can increase Gold’s profit.
Silver follows the path of Gold in the midst of dollar weakness
Silver (XAG/USD) mirrored the upward movement of Gold and reached $ 32.39 before he settled at $ 32.32. The metal benefited from weaker dollars and falling bond returns, which increased its appeal to industrial and investment purposes.
The silver prices have risen nearly 7% this month, supported by growing concern about the tensions of global trade and the robust demand from the sustainable energy sector.
“The momentum of Silver is largely powered by industrial demand and safe port flows,” said Emily Johnson, a senior metal strategist. “The weaker dollar and potential disruptions of the delivery of trade barriers are important factors that support the current rally.”