(Bloomberg) -- Gold snapped a sixth-day decline as traders mulled the size of the Federal Reserve’s interest-rate cuts for the rest of the year following mixed inflation and labor data in the US.
Underlying US inflation rose more than forecast in September, representing a pause in the recent progress toward moderating price pressures. The so-called core consumer price index — which excludes food and energy costs — increased 0.3% from August and 3.3% from a year ago. Meanwhile, applications for US unemployment benefits rose last week to the highest in over a year, reflecting large increases in Michigan, as well as states affected by Hurricane Helene.
Bullion rose by as much as 0.8% with traders slightly adding to bets on a quarter-point rate reduction at the Fed’s November meeting.
“With CPI, CPI core coming in stronger-than-expected, but claims clocking in higher, we may be getting a situation when the Fed may still wants to be dovish,” said Bart Melek, global head of commodity strategy at TD Securities. “This implies real rates along the curve may trend lower, which is accretive for gold.” Bullion typically benefits in a low-rate environment.
The precious metal is up by more than 25% this year as rate-cut optimism has fueled recent gains. Strong central bank purchases and heightened geopolitical tension have also supported gold, though fears that hostilities in the Middle East could morph into a full-blown regional war have yet to be realized — possibly reducing some haven demand.
Spot gold was up 0.6% at $2,623.98 an ounce as of 9:07 a.m. in New York, below an all-time high of $2,685.58 in September. The Bloomberg Dollar Spot Index fell 0.1% after an eight-day winning streak. Silver, platinum and palladium all advanced.
--With assistance from Sybilla Gross.
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