Gold prices surged at the end of trading Thursday (11/10/2022) because the lower-than-expected US inflation data opened the opportunity for the Fed not to be too aggressive in raising further interest rates. The price of gold rose sharply from the previous session to perch above the new psychological level of US$1,750 per ounce, the highest peak in 11 weeks, driven by US inflation data which was lower than expected, quoting Antara.
The Comex gold price, the most active December contract, jumped US$40 or 2.33 percent to close at US$1,753.70 per ounce. Gold prices closed at their highest finish since Aug. 25 after hitting a session high of US$1,757.20.
The US Department of Labor reported Thursday that the US October Consumer Price Index (CPI) rose 0.4 percent month-on-month, lower than the 0.6 percent expected by economists and an increase of 7.7 percent year-on-year. year on year, compared with 8.2 percent last year.
Historical data showed it was the lowest annual reading for inflation since January. Prior to October, both the White House and economic policymakers at the Federal Reserve (Fed) had struggled to contain inflation, as the annual figure for the CPI hit a four-decade high of 9.1 percent in June.
To control inflation, the Fed has added 375 basis points to interest rates since March through six rate hikes. The Fed, which executed four consecutive jumbo rate hikes of 75 basis points from June to November, is considering a hike of 50 basis points in December.
The US dollar index and government bond yields retreated, due to a smaller-than-expected rise in US inflation data. The data also fueled hopes that the Federal Reserve could ease to a 0.5 point increase pace in December.
Gold prices found additional support as the US Department of Labor reported Thursday (10/11/2022) that US initial jobless claims rose 7,000 to 225,000 in the week ending November 5. Meanwhile, Monex Investindo Futures in its report conveyed the sentiment of the weakening US dollar on the back of the release of US CPI data which was lower than estimated and the statement by Fed Harker that tends to be dovish which has the potential to support gold price increases.
“Today’s gold trading opportunities, the spot gold price has the opportunity to be bought to test the resistance level of US$1,770 as long as the price holds above the support level of US$1,740,” said Monex in his research. However, a drop lower than the support level has the opportunity to trigger a sell-off against the gold price to test the next support level of US$1,735.