Posted 15th January 2024

Gold Price News: Gold Jumps After Signs of Lower US Inflation

Gold prices rebounded strongly on Friday on the back of weaker than expected US inflation data, rounding the week off in bullish mood and more than recouping the losses seen earlier in the week.

Gold prices rallied as high as $2,061 an ounce, putting the metal back to levels last seen on January 5. The latest gains more than eclipsed losses seen on Thursday when the yellow metal traded as low as $2,013 an ounce.

KAU/USD 1-hourly

US Producer Price data released Friday showed that inflation was weaker than expected in December, going against recent signs of strengthening inflation and making it more likely that the US Fed would start to cut interest rates sooner rather than later.

Gold had already started to rebound in late trades Thursday, and Friday’s US data injected extra momentum to the upside move.

The bullish effect was magnified further after news reports highlighted US and UK air strikes on over 60 Houthi targets in Yemen, which aim to deter further attacks on ships passing through the Red Sea.

The latest hostilities are bullish for safe-haven gold, as they raise the risk that the conflict in the Middle East could broaden into a more disruptive scenario for international trade. The entry point into the Red Sea from the Indian Ocean – the Gulf of Aden – is a major shipping route of significance to the world economy, with more than 10% of the world’s seaborne petroleum passing through this choke point.

Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.

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