Gold prices jumped over 1% Friday after new data showed inflation cooling more than expected in November, boosting hopes that the Federal Reserve will cut interest rates in 2024.
The core PCE price index – the Fed’s preferred measure of inflation – rose just 0.1% from October, marking the slowest monthly increase since May. The yearly rate dropped to 2.8%, closer to the Fed’s 2% target.
Friday’s rally helped gold recover from Thursday’s sharp selloff, which was triggered by Fed officials suggesting they might keep rates higher for longer. The precious metal is now trading around $2,626 per ounce.
Gold has been one of 2023’s best-performing assets, surging 27% as investors seek protection from economic uncertainty. Central banks worldwide have also been loading up on gold, helping drive prices to record highs.
The dollar and Treasury yields both fell after the inflation report, making gold more attractive to international buyers. However, some analysts warn the rally could face headwinds if the Fed delays rate cuts or if Donald Trump’s growing lead in election polls continues strengthening the dollar.
Other precious metals followed gold higher, with silver, platinum, and palladium all posting gains in Friday trading.
