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Gold rises to 5-month high as inflation data lift hopes for dovish Fed

Close up of bracelet for evaluation or sell or pawn at gold/pawn shop.

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Gold and silver futures rose Tuesday as the dollar and U.S. Treasury yields declined after a report showed that inflation was less than estimated last month. The softer reading may give the Federal Reserve another reason to be less aggressive in raising interest rates next year.

Comex gold (XAUUSD:CUR) for February 2023 rose +2.27% to $1,821.38/oz, the highest in five months, while March Comex silver (XAGUSD:CUR) advanced +2.88% to $23.96/oz, the highest in seven months.


Among some of the major precious metals miners: Newmont (NYSE:NEM) +3.9%, Barrick (NYSE:GOLD) +4.2%, Kinross Gold (NYSE:KGC) +4.2%, Royal Gold (NASDAQ:RGLD) +3.6%, Yamana Gold (NYSE:AUY) +2.5%, Agnico Eagle Mines (NYSE:AEM) +2.7%, Iamgold (NYSE:IAG) +6.4%, Gold Royalty (NYSE:GROY) +1.5%, Endeavour Silver (NYSE:EXK) +5.3%, Fortuna Silver (NYSE:FSM) +4.2%, Pan American Silver (NASDAQ:PAAS) +2.5%, First Majestic Silver (NYSE:AG) +3.3%, Hecla Mining (NYSE:HL) +3.2%, Coeur Mining (NYSE:CDE) +4.7%.

The Consumer Price Index (CPI) rose +7.1% from a year earlier in November, compared with the consensus forecast for a +7.3% gain and the October reading of +7.7%.

The somewhat softer inflation data aren’t likely to prevent the Fed from raising rates tomorrow, but may lead Jerome Powell, chair of the central bank, to be less hawkish at a press conference after the rates decision is announced.

“This report does not change tomorrow’s Fed decision; they will hike by 50bp,” Pantheon Macroeconomics said in a note Tuesday, “but Chair Powell’s tone likely will be less aggressively hawkish than in November, and his more dovish colleagues likely will be emboldened by this report. We now think 25bp is more likely on Feb 1, and we think that will be the final hike.”

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