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  • Writer's pictureanalysiswatch

Title: Gold Down as Strong U.S. Inflation Data Increase Chances of Fed Rate Hike

Feb 10, 2022 11:08PM ET

By: AnalysisWatch

Gold prices fell in Asia on Friday morning as better-than-expected inflation data from the US and aggressive comments from a Federal Reserve policymaker increased bets on a significant rate hike. US government bond yields also rose after the data.

Gold futures were down 0.64 percent at $1,825.55 at 11:05 a.m.

US data on Thursday showed that the consumer price index rose 7.5% year-on-year and 0.6% month-on-month in January. The core consumer price index rose 0.6% last month and 6% during the year. This was the strongest annual rise in inflation in 40 years and accelerated bets that the Fed would raise interest rates by 50 basis points in March 2022.

St. Louis Fed President James Bullard said after the data was released that he wanted to see a full percentage point of rate hikes in the Fed's next three meetings. Interest rate futures indicated the probability of the central bank raising rates by 50 basis points in March 2022 was 62 after Bullard's comments, more than double the 30% probability recorded late Wednesday.

Benchmark 10-year government bond yields remained close to their all-time high of 2% in August 2019.

Meanwhile, geopolitical tensions remain high in Eastern Europe as Russia and Ukraine failed to reach an agreement in talks with France and Germany, ultimately failing to achieve their goal of ending the conflict over Ukraine. Russia is holding military exercises in Belarus and the Black Sea following the build-up of its forces near the Ukrainian border.

In other precious metals, silver fell by 0.3%, platinum fell by 0.5% and palladium by 1%.

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