Gold Prices Rise Ahead of Key US January CPI Inflation Data Release

TLDR

• Gold futures rose 0.8% to $4,990 per ounce on Friday as investors awaited US January CPI inflation data scheduled for release at 8:30am ET
• Spot gold jumped 1.1% to $4,973.49 per ounce after tumbling over 3% in the previous session
• Deutsche Bank economists forecast monthly CPI at 0.26% for January, down from 0.31% in December, with year-on-year rate expected to fall to 2.5%
• Safe haven demand increased after reports indicated the US planned to deploy second aircraft carrier USS Gerald R. Ford to Middle East as Iran nuclear talks faltered
• The pound traded steady at $1.3617 against the dollar while the US dollar index rose 0.2% to 97.05 ahead of inflation data

Gold prices climbed on Friday morning as traders prepared for crucial US inflation data that could shape Federal Reserve interest rate policy. The precious metal rebounded after suffering heavy losses in the previous trading session.

Gold futures for April delivery increased 0.8% to $4,990 per ounce. Spot gold jumped 1.1% to $4,973.49 per ounce at the time of trading.

The US Bureau of Labor Statistics was scheduled to release the January consumer price index at 8:30am Eastern Time. Markets have been closely watching inflation data to gauge the Federal Reserve’s next moves on interest rates.

Spot gold had tumbled over 3% in Thursday’s session. The Friday rebound marked a recovery from those steep losses.

Other precious metals also showed gains on Friday. Spot silver rose 4% to $78.703 per ounce after losing roughly 10% in the previous session. Spot platinum climbed 0.6% to $2,034.65 per ounce, moving back above the $2,000 mark.

Middle East Tensions Support Gold Demand

Safe haven demand helped support gold prices on Friday. Multiple reports indicated Washington planned to deploy a second aircraft carrier to the Middle East.

The USS Gerald R. Ford was reportedly being sent to the region. This decision came as nuclear negotiations with Iran appeared to be failing.

The pound sterling traded at $1.3617 against the US dollar on Friday morning. The greenback strengthened ahead of the inflation release.

The US dollar index tracked the currency against six major peers. It rose 0.2% to 97.05 during Friday trading.

Deutsche Bank economists provided their forecast for January’s inflation numbers. They predicted monthly CPI would come in at 0.26%, down from December’s 0.31% reading.

Expected Inflation Trends and Market Impact

The bank’s analysts expected the year-on-year inflation rate to fall to 2.5%. They noted headline inflation would likely be weighed down by a 2.4% decline in motor fuel prices.

Core CPI was forecast to show relative strength at 0.35% for the month. Deutsche Bank analysts were watching for tariff-related increases in core goods prices.

They expected continued impact in categories like household furnishings and supplies. Apparel prices were also being monitored for tariff effects.

Francesco Pesole, an FX strategist at ING, said Friday’s CPI report would likely have less market impact than Wednesday’s payroll data. The Federal Reserve has been signaling little urgency to cut rates again.

ING’s forecast aligned with consensus expectations. The firm predicted 0.3% month-on-month and 2.5% year-on-year readings for both core and headline CPI.

ANZ analysts noted in a research note that an unexpected rise in inflation could reduce the Fed’s willingness to cut interest rates. This would make gold less attractive to investors who seek yield.

Higher interest rates reduce the appeal of non-yielding assets like gold. A stronger dollar also typically pressures gold prices since the metal is priced in US currency.

Labor market data released Wednesday showed some resilience in January. The stronger-than-expected nonfarm payrolls report had already dampened expectations for aggressive rate cuts.

Precious metals have struggled for direction since a flash crash occurred in late January. Uncertainty over US interest rate policy remains a key source of pressure on gold prices.

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