Gold Soars on Rate Cut Bets

16 Jan 2025 , 09:53 AM

Early Asian hours on Thursday saw gold prices reach more than one-month highs after data revealed that U.S. core inflation increased less than anticipated in December, boosting expectations that the Fed would further reduce interest rates.

Spot gold was steady at $2,695.84 an ounce, having earlier in the day reached its highest level since December 12. At $2,723.80, U.S. gold futures increased by 0.2%.

The dollar recovered some of its losses against key peers on Wednesday, but it remained lower, and U.S. Treasury yields declined, supporting bullion.

The CPI statistics raised expectations for additional rate cuts this year, with odds of a minimum 25 basis point cut at the June Fed meeting.

At its upcoming policy meeting on January 28–29, the Fed is anticipated to maintain its benchmark rate in the current range of 4.25%–4.50%.

There are still worries that the new administration of President-elect Donald Trump may impose tariffs that would drive up inflation even more.

As they wait for a first look at the policies of the new Trump administration, central bank officials said statistics released on Wednesday showed U.S. inflation was continuing to drop, despite pointing to further uncertainty in the months ahead.

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