(Kitco News) - The gold market is attracting renewed attention as inflation pressures were not as hot as expected, which could give the Federal Reserve room to cut interest rates later this year to support slowing economic activity.
The Consumer Price Index (CPI) jumped 0.9% in March, following a 0.3% increase in February, the U.S. Bureau of Labor Statistics announced on Friday. Although inflation picked up sharply last month, the increase was weaker than expected. According to consensus forecasts, economists had projected a full 1% increase in consumer prices.
Over the last 12 months, headline inflation rose 3.3%, up from February’s reading of 2.4%. However, economists were looking for a 3.4% increase.
The report also showed that despite the sharp rise in headline inflation, higher prices are not becoming embedded in the broader economy. Core CPI, which strips out volatile food and energy prices, rose 0.2% last month.
For the year, core inflation rose 2.6%, up from 2.5% reported in February.
Gold prices jumped more than $10 in their initial reaction to the latest inflation data and have managed to hold on to most of those gains. Spot gold was last trading at $4,775.30 an ounce, up 0.21% on the day.
Analysts said that investors need to watch resistance at $4,800 an ounce closely.
