US Inflation Data Hits Gold, Price Rebounds on Trump's Fed Attack
Wednesday, 2/12/2025 15:33
GOLD PRICES tumbled Wednesday on strong US inflation data, but the precious metal then rebounded towards $2900 per Troy ounce after President Trump demanded for the first time in his new term of office that the Federal Reserve cut Dollar interest rates, directly contradicting yesterday's testimony to Congress from Fed chair Jerome Powell.
"Interest Rates should be lowered," tweeted the celebrity real-estate mogul on his TruthSocial platform, "something which would go hand in hand with upcoming Tariffs!!!
"Lets Rock and Roll, America!!!
Trump repeatedly called on the Fed to slash the cost of borrowing during his first term in the White House, attacking Powell for not being a "low rates guy".
Powell yesterday told Congress in his semi-annual testimony on monetary policy that
the Fed "is in no rush" to cut borrowing costs further following last year's 1 percentage point cut from
the highest US interest rates since 2001.
Chosen by Trump in 2017 during the Republican President's first term, Powell is due to keep leading the US central bank until May 2026.
US inflation accelerated last month to 3.0% per year, January's CPI index said today, with the cost of living excluding fuel and food rising 3.3% from 12 months before.
That reversed December's drop to the slowest pace since April 2021, and put 'core' US inflation 1.3 percentage points above the Fed's official target.
Gold priced in the Dollar spiked as low as $2864 per Troy ounce on that inflation data, erasing the last of this week's earlier 2.6% leap to fresh record highs. But it then rallied to $2690 following
Trump's comments.
Silver also remained volatile, swinging almost 90 cents above yesterday's 1-week low of $31.26 per Troy ounce but making a spike down to $31.53 inbetween.
The gap between New York Comex
gold futures and London gold prices meantime held around $20 per Troy ounce, sharply below the tariffs-threat-driven spike to $50 which has driven a flood of bullion shipments into the USA.
"Following
a surge of gold imports into New York, it seems likely that the dislocation between New York futures prices and the London OTC market is nearing an end," Reuters quotes John Reade of mining-industry data, lobby and marketing group the World Gold Council.
"As the next few weeks pass, queues getting gold from the Bank of England's vaults should diminish, easing an apparent shortage of liquidity in the London market."
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