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Gold prices jump as U.S. CPI cools more than expected

Gold prices are seeing renewed buying momentum as consumer prices cooled more than expected in May, which, according to some economists, could give the Federal Reserve some room to ease interest rates this year.

The Consumer Price Index (CPI) was unchanged last month after April’s 0.3% increase, the U.S. Bureau of Labor Statistics said on Wednesday. The latest inflation data was weaker than expected, as economists expected a 0.1% increase.

The report said that in the last 12 months, headline inflation rose 3.3%
At the same time, core CPI, which strips out volatile food and energy prices increased 0.2%, also missing expectations; according to consensus forecasts, economists were looking for a 0.3% increase.

The report said that annual core inflation rose 3.4%. Although inflation remains above the Federal Reserve’s target of 2%, it is down from last month’s annual increase of 3.6%. Economists were expecting an unchanged reading.

The gold market was seeing some modest buying ahead of the report and has seen renewed bullish momentum in its initial reaction to the inflation data. August gold futures last traded at $2,342.10 an ounce, up 0.62% on the day.

Michael Brown, Senior Research Strategist at Pepperstone, said that the latest inflation data could shift sentiment at the Federal Reserve ahead of its monetary policy decision later in this afternoon

“The May US CPI report is one that should provide the FOMC with some degree of further confidence in the disinflationary process back towards the 2% target, with headline CPI remaining unchanged on an MoM basis, for the first time since last June. Furthermore, core CPI slipped further on an annual basis, hitting a more than 3-year low at 3.4%.

Adam Button, head of currency strategy at, said that following the inflation data, markets have fully priced in two rate cuts this year, with an 80% chance of a move in September.

Source: Neils Christensen Kitco