Gold prices increased following the release of recent U.S. economic data, as traders raised their bets on the Federal Reserve lowering interest rates next month. U.S. consumer prices in September rose slightly more than expected, but the year-over-year increase was the smallest in three and a half years.
Additionally, a report revealed that the initial jobless claims for the week ending October 5 rose to 258,000, higher than the anticipated 230,000. According to Alex Ebkarian, COO of Allegiance Gold, the Consumer Price Index (CPI) report did not present significant surprises. However, the weak job market data supports the Fed's potential rate cut, which benefits gold prices.
The CME FedWatch tool now indicates an 80% chance of a 25 basis point Fed rate cut next month, up from 76% prior to the data release. Ebkarian also noted that increasing geopolitical tensions and strong demand driven by central banks are additional positive catalysts for gold.
