US consumer prices posted the largest increase since February 2013 last month amid higher gasoline prices, keeping the Federal Reserve on course to raise interest rates further this year. The US Commerce Department reported on Wednesday its headline CPI climbed 0.6% month-over-month in January, while analysts expected the Index to remain unchanged from the prior month at 0.3%. Excluding volatile items, core consumer prices rose 0.3% last month, after growing 0.2% in December. The January inflation jump was mainly driven by higher gasoline, apparel and motor vehicles prices. On Tuesday, the Fed Chair Janet Yellen said the Bank would probably raise rates at its next policy meeting.
In the meantime, the so-called core PPI, which excludes volatile items, jumped 0.4% month-over-month in January, compared with analysts' expectations for an unchanged reading of 0.2%. Year-over-year, core producer prices grew 1.6% last month, following December's gain of 1.7% and providing support for the view that the Federal Reserve could raise rates in the upcoming months as promised. Back in December, the Central bank raised its overnight rate to a range of 0.50-0.75% and projected three more rate hikes in 2017. The Federal Reserve Chair Janet Yellen said on Tuesday that the Bank would probably increase rates already at its next policy meeting in March. Following Janet Yellen's comments, the US Dollar hit its three-week high against a basket of currencies, while US government bonds dropped markedly.
Upcoming events: Various US data in the noon
Traders have to keep their attention at its highest at 13:30 GMT. At that time a US data package will be released. The package will consist of US Building Permits; Philly Fed Manufacturing Index, US Unemployment Claims and, in addition, the US Housing Starts. Stay tuned into Dukascopy Live Webinars to see the coverage of the release.
Gold trades above 1,235
Daily chart: The yellow metal surged on Thursday, as the bullion found support on Wednesday and continued the surge during the early hours of Thursday's trading session. The rebound occurred against the 20-day SMA at 1,216.26, and the bullion managed to reach above the 1,235 level during today's trading. However, this might be the end of the surge, as the commodity price faces the combined resistance of the monthly R1 at 1,237.68 and the upper trend line of the long term descending channel pattern at 1,238.67.SWFX traders remain bullish
Spreads (avg,pip) / Trading volume / Volatility
Market participants foresee the price of Gold being around 1,250 in May
Traders who were asked regarding their longer-term views on gold between January 16 and February 16 expect, on average, to see the metal near 1,250 in May. Generally, 61% (+3%) of participants believe the price will be above 1,250 in ninety days. Alongside, 29% (-3%) of those surveyed reckon the currencies will trade in the range between 1,000 and 1,200 over the next three months.