Inflation Data Pushed Gold Higher
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Inflation data was released in the US, UK and China today, creating demand for gold, the pound and the dollar. Higher yields have been driving the moves in the currency markets.
In the UK, January CPI was in line with expectations, rising 0.1% on the month but lifting the year-over-year rate to 4% from 3.7%. The core rate ticked up to 3.0% from 2.9%. The BOE is now obligated to write its 5th explanatory letter to the Chancellor. King attributes the price pressures to the VAT hike, past sterling weakness and the more recent increase in commodities. He warns of the risk of further increases in the coming months. The first resistance level is near $1.6135.
In the US, the price of goods imported to the U.S. climbed by 1.5% in January from the month before, according to the Labor Department. This follows an upwardly revised 1.2% gain in December, versus an initial estimate of 1.1%. Import prices are up 4.3% over the past three months, the biggest three-month gain since a 5.6% advance in June 2009. Economists had expected a 0.8% price increase in January. Food prices rose 2.6% last month compared with December, resulting in a year-over-year increase of 14.8%. In response, Gold prices have rallied and are testing resistance near 1375.
Source:
currencyhedging.org