Gold Plunges As Markets Weigh Inflation Trajectory

NEW YORK (Feb 15) Gold prices slumped more than a percent on Wednesday amidst a less than expected dip in inflation in the U.S. Annual inflation in the U.S. dropped to 6.4 percent in January versus 6.5 percent in December and expectations of 6.2 percent. Core inflation dropped to 5.6 percent in January versus 5.7 percent in December and expectations of 5.5 percent.

The slowing down in the decline in inflation has made markets nervous prompting speculation about how hawkish the Fed would be in raising rates, going forward. Expectations of a quick pivot by the Fed also fizzled as inflation continued to be way above the Fed's target of 2 percent.

The sticky inflation reading and the prospect of still higher rates for longer than expected lifted the Dollar and the Dollar Index added 0.25 percent overnight to record 103.50. The day's range was between 103.16 and 103.63. The Dollar's strength exacerbated the decline in the prices of Gold.

Gold Futures for April Settlement dropped 1.1 percent to trade at $1,845.35. The day's trading range has been between $1,870.90 and $1,841.50.

Spot Gold also shed 1.02 percent to trade at $1,835.51 per troy ounce. The day's trading range has been between $1,831.94 and $1,860.15.

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