Gold prices rose 0.7% as US dollar weakened on low inflation data, anticipating Fed rate cuts

From Investing.com: 2025-01-16 02:08:00

Gold prices rose by 0.7% as the US dollar weakened following the release of lower-than-expected US Consumer Price Index (CPI) data. The report eased inflation concerns and increased hopes for further Federal Reserve rate cuts. Market expectations for rate cuts have increased to 40 basis points by year-end. Gold tends to thrive in a low-interest-rate environment and is seen as a safe-haven asset amidst global economic uncertainty.

Despite lower US inflation data, the euro struggled to gain strength against the US dollar, falling by 0.17%. The Federal Reserve’s potential rate cuts are still expected to outpace those of the European Central Bank. The US dollar remains strong, with the dollar outperforming European currencies.

The Canadian Dollar saw a limited decline as traders remained cautious about potential US trade tariffs following cooler US inflation data. The US dollar remains in high demand as concerns about tariffs persist. Canadian economic data showed a decrease in home sales but an increase in oil prices, which benefited the Canadian economy. Market attention is focused on upcoming US Retail Sales and Jobless Claims data.



Read more at Investing.com: Gold Rises as Markets Anticipate Fed Rate Cuts