Gold prices moved higher on Friday morning as investors positioned themselves ahead of the latest US inflation report. The data release is expected to provide further direction for Federal Reserve policy and financial markets more broadly.
At the time of writing, gold futures were up 0.8% at $4,990 per ounce, while spot gold advanced 1.1% to $4,973.49 an ounce.
The US Bureau of Labor Statistics is scheduled to publish the January consumer price index at 8:30am ET, a release closely watched by traders assessing the outlook for interest rates.
Gold
The increase in gold prices reflects cautious positioning before the inflation print. Gold often reacts to expectations around US monetary policy. When investors anticipate lower interest rates, non-yielding assets such as gold can become relatively more attractive.
Recent economic data has introduced some uncertainty into rate expectations. A stronger-than-expected jobs report earlier in the week prompted questions about how quickly the Federal Reserve might consider further rate cuts.
Deutsche Bank analysts noted that the January CPI reading is particularly significant because markets continue to anticipate additional easing under a new Federal Reserve Chair. However, stronger economic data has created some doubt about that outlook.
They added that a higher-than-expected inflation reading could reinforce more cautious rate expectations, especially as the current quarter is already benefiting from fiscal stimulus linked to tax policy changes.
Inflation
Deutsche Bank’s US economists forecast monthly CPI growth of 0.26% for January, compared with 0.31% in December. On a year-on-year basis, they expect inflation to ease to 2.5%.
However, the bank expects headline inflation to be influenced by a 2.4% decline in motor fuel prices. Core CPI, which excludes volatile food and energy components, is projected to remain firm at 0.35% month-on-month.
Analysts are also monitoring potential tariff-related price pressures in core goods. Categories such as household furnishings, supplies, and apparel may continue to show upward pressure.
ING’s foreign exchange strategy team said they do not expect major surprises in the January data. The bank forecasts 0.3% month-on-month and 2.5% year-on-year increases for both headline and core CPI.
According to ING, the Federal Reserve has indicated limited urgency to cut rates again, with labour market conditions likely to carry greater weight than a single inflation release.
Currencies
In currency markets, the US dollar firmed slightly ahead of the inflation report.
The US dollar index, which measures the greenback against a basket of six currencies, rose 0.2% to 97.05.
The pound was steady against the dollar at $1.3617. Against the euro, sterling traded at €1.1475, showing little movement.
Currency strategists suggested that while inflation data can influence markets, its impact may be more muted than the recent payrolls report unless there is a significant deviation from expectations.
Oil
Oil prices stabilised following declines in the previous session.
Brent crude futures were little changed at $67.53 per barrel in early European trading. West Texas Intermediate futures fell 0.2% to $62.73 per barrel.
The International Energy Agency recently revised down its global oil demand outlook for 2026 by 9%, to 850,000 barrels per day. At the same time, supply disruption from cold weather is expected to be temporary. Supply growth estimates were only slightly reduced, from 2.5 million to 2.4 million barrels per day.
The combination of softer demand expectations and steady supply has contributed to recent price weakness.
Equities
Equity markets showed limited movement ahead of the inflation release.
The FTSE 100 index traded around 10,400 in morning trading, reflecting a cautious tone among investors awaiting further economic signals.
Overall, markets remain focused on whether inflation continues to moderate toward the Federal Reserve’s target. The CPI data is expected to provide further clarity on the trajectory of prices and the potential timing of any future policy adjustments.
FAQs
Why did gold prices rise?
Investors positioned ahead of US inflation data.
What is the expected January CPI rate?
Around 0.3% month-on-month and 2.5% year-on-year.
How did the dollar move?
The dollar index rose 0.2% to 97.05.
What happened to oil prices?
Brent was steady; WTI dipped slightly.
