Gold futures settled at their highest price since late August on Thursday, supported by a pullback in the U.S. dollar and Treasury yields after data showed a smaller-than-expected monthly rise in U.S. inflation.
The U.S. consumer-price index reading signaled a modest rise in the cost of living, raising the possibility that the Federal Reserve might scale back the size of its interest-rate hikes in December.
Gold futures for December delivery GCZ22 GC00 rose $40, or 2.3%, to settle at $1,753.70 per ounce on Comex after trading as high as $1,757.20. The settlement was the highest for a most-active contract since Aug. 25, according to Dow Jones Market Data.
Silver for December delivery SIZ22 SI00 tacked on 38 cents, or 1.8%, to $21.702 per ounce, the highest finish since June 21.
December palladium PAZ22 climbed $95, or 5.1%, to $1,954.20 per ounce, while January platinum prices PLF23 rose $57.50, or 5.8%, to $1,055 per ounce.
Copper futures HGZ22 for December delivery added 6 cents, or 1.6%, to $3.758 per pound.
“Inflation has finally started to drop like a rock in the U.S. and this is the best news that anyone can expect,” said Naeem Aslam, chief market analyst at AvaTrade, in written commentary following the CPI data release. The dollar index plunged on the back of this reading “as traders know that inflation is moving in the right direction.”
The U.S. cost of living rose a relatively modest 0.4% in October, a sign price pressures in the U.S. are waning after the biggest surge in inflation in 40 years. Economists polled by The Wall Street Journal had forecast a 0.6% increase in the consumer-price index.
Against that backdrop, the ICE U.S. Dollar index
fell 1.8% to 108.524. The 10-year Treasury note yield
also declined by 29 points to 3.8565%.
“The U.S. inflation data has also brought a lot of good news for the gold price, which is now solidly above the 1,700 price level,” said Aslam. “One thing is for certain that the Fed will still continue to increase the interest rate, but there is no need to be aggressive about this which means that the pace of interest rate hike will slow down now.”
The Federal Open Market Committee will hold its next monetary policy meeting on Dec. 13-14.
Copper prices, meanwhile, marked their highest settlement since late June, as some analysts warn of tight global supplies for years to come.