Gold futures inched higher on Tuesday after core inflation remained below the Federal Reserve’s target. The firing of Secretary of State Rex Tillerson by President Donald Trump too added value to the gold rates.
Following the consumer price data, the Fed is likely to proceed gradually with interest rate hikes, which is expected to be three times this year.
The Labor Department data showed that its core consumer prices, which exclude food and energy prices, grew 1.8% on year in February, unchanged from last month. Consumer price index rose 2.2% annually in February, faster than 2.1% growth in January, helped by a rise in transportation services, shelter, medical care commodities, and medical care services.
The dollar weakened following the consumer price data, which confirmed that inflation acceleration is likely to slow down. The report came after Friday’s data on wage growth downtrend curbed concerns about inflationary pressures and diminished predictions for four interest rate hikes this year.
The US dollar index edged down 0.30% to 89.62. The currency markets could be impacted by the number of rate hikes as investors remained fascinated to the greenback when interest rates are higher.
Meanwhile, President Donald Trump fired Secretary of State Rex Tillerson, representing the biggest staff change in the Trump cabinet so far. Tillerson is being replaced by Central Intelligence Agency director Mike Pompeo and the intelligence agency’s deputy director Gina Haspel will replace Pompeo at CIA.
In addition, it is expected that Trump might replace the outgoing director of National Economic Council Gary Cohn soon. The people who are considered for the role includes economist and CNBC contributor Larry Kudlow, White House trade adviser Peter Navarro, Deputy Director for Economic Policy Shahira Knight, Budget Director Mick Mulvaney and Heritage Foundation chief economist Stephen Moore.
The firing of Tillerson is expected to have an impact on the market, creating more uncertainty and thus enabling gold to explode. Gold futures traded up 0.51% at $1,327.50 on Tuesday.