Gold prices climb ahead of US inflation data

Gold prices rose on Friday morning, as investors awaited the release of US inflation data later in the day.

Gold futures (GC=F) were up 0.8% to $4,990, per ounce at the time of writing, while spot gold jumped 1.1% to $4,973.49 an ounce.

The US Bureau of Labor Statistics is due to release the January consumer price index (CPI) at 8.30am ET (1.30pm GMT).

Deutsche Bank analysts said in a note on Friday morning that this print “is an important one, because markets are still expecting further rate cuts under a new Fed Chair, but stronger data like the jobs report on Wednesday has led to a bit more doubt as to whether that’s still possible.”

“So another hawkish print today would further push in that direction, particularly given this quarter is already seeing a decent fiscal impulse from the Trump tax cuts,” they said.

Deutsche Bank’s US economists forecast that monthly CPI will come in at 0.26% for January, down from 0.31% in December and expected that this would see the year-on-year rate fall to 2.5%.

“However, they think that headline inflation would be weighed down by a -2.4% decline in motor fuel prices, meaning that core CPI should be relatively strong at +0.35% on the month,” Deutsche Bank’s analysts said. “Otherwise, they’re keeping an eye on tariff-related strength in core goods, as they expect a continued impact in categories like household furnishings and supplies, as well as apparel.”

The pound was steady against the dollar (GBPUSD=X) on Friday morning, trading at $1.3617 at the time of writing, as the greenback firmed ahead of the US inflation reading.

The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six currencies, was up 0.2% at 97.05.

Francesco Pesole, FX strategist at ING, said: “Today’s US CPI report is likely to have a smaller market impact than Wednesday’s payrolls. The Federal Reserve has been signalling little urgency to cut again, and it’s mostly the jobs market that can move the needle.”

“Incidentally, we don’t expect surprises in January’s inflation,” he said. Pesole said that ING was aligned with consensus for a 0.3% month-on-month and 2.5% year-on-year reading for both core and headline CPI.

“That should endorse the latest hawkish repricing in Fed expectations, which has brought the dollar further into short-term undervaluation,” he added.

Meanwhile, the pound was also little changed against the euro (GBPEUR=X), trading at €1.1475 at the time of writing.

Oil prices steadied on Friday morning, following steep falls in the previous session, on a weaker outlook for demand.