AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

1/12/2022: Gold hits 2-week high on CPI

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rose 0.5% to close at a two-week high above $1,827 after the Consumer Price Index recorded the highest annual inflation rate in nearly 40 years, boosting demand hedges against loss of purchasing power. It was the metal’s fourth straight day of gains.

The CPI rose another 0.5% in December, pushing the annualized rate to 7%, the highest since 1982. The main drivers were higher prices for cars and housing. The so-called core CPI, factoring out volatile food and energy costs, increased 0.6% for an annualized rate of 5.5%, the highest in 31 years.

While strong, the readings were in line with most economists’ forecasts.

The dollar tumbled 0.7% to a two-month low as Forex traders unwound bets that inflation would be even stronger and add to pressure on the Fed to tighten monetary policy even more aggressively. A weaker dollar supports gold and other commodities by making them less expensive overseas.

Inflation is expected to moderate in 2022 as supply-chain pressures ease. And while the Fed has accelerated plans to removing monetary easing and raise interest rates, Fed Chair Jerome Powell told the Senate Banking Committee yesterday that adjustments to policy will be measured.

Benchmark 10-year Treasury yields also pulled back, lifting gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Oil prices jumped to a two-month high, the WTI crude rising 1.7% to more than $82.60 per barrel after domestic inventories fell for the seventh straight week, according to the Energy Information Administration. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were mostly higher, with silver and p0latinum climbing 1.7% and 0.7%, respectively, while palladium slipped 0.3%.

At the Comex close: February gold gained $8.80 to $1,827.30; March silver rose 39 cents to $23.21; April platinum picked up $6.90 to $980.10; and March palladium lost $6.30 to $1,915.80 an ounce.