Gold was down on Friday morning in Asia, with stronger-than-expected U.S. inflation data and hawkish comments from a Federal Reserve policymaker increasing bets of a substantial interest rate hike. U.S. Treasury yields were also higher after the data.
Gold futures fell 0.64% to $1,825.55 by 11:05 PM ET (4:05 AM GMT).
Thursday’s U.S. data showed that the consumer price index (CPI) grew 7.5% year-on-year, and 0.6% month-on-month, in January. The core CPI grew 0.6% month-on-month and 6% year-on-year. It was the biggest annual increase in inflation in 40 years and accelerated bets that the Fed would hike interest rates by 50 basis points in March 2022.
St. Louis Fed President James Bullard said after the data’s release that he wanted to see a full percentage point worth of rate hikes from the Fed over the next three policy meetings. Rate futures indicated a 62% chance that the central bank will hike interest rates by 50 basis points in March 2022 following Bullard’s remarks, more than double the 30% chance recorded late on Wednesday.
Benchmark 10-year Treasury yields remained near Thursday’s August 2019 high of 2%.
Meanwhile, geopolitical tensions in Eastern Europe also continue as Russia and Ukraine failed to reach any breakthrough in talks with France and Germany. The talks ultimately did not achieve their aim at ending the conflict over Ukraine, with the U.K. adding that the “most dangerous moment” in the tensions appeared imminent. Russia is holding military exercises in Belarus and the Black Sea following the buildup of its forces near the border with Ukraine.
In other precious metals, silver was down 0.3%, platinum fell 0.5% and palladium dropped 1%.