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Gold prices soared to a two-week high on Friday on hopes that the Fed's plans to skip a rate hike will remain unchanged after the new CPI data.

The price of gold rose to a two-week high on Friday of nearly $1,890 per ounce, boosted by the expectations that the Federal Reserve will not raise rates at the forthcoming policy meeting on November 1. The uptick comes a day after a new consumer price index (CPI) report showed that core inflation cooled down in September. 
 

Gold Nears $1,900 per Ounce on Hopes that Fed Will Skip a Rate Hike Again 

Gold prices have sharply recovered this week, particularly after a Thursday upswing caused by the new CPI report, which showed that September headline inflation exceeded expectations while the core inflation cooled.

Investors jumped on the bullion after the new inflation data raised hopes that the Federal Reserve will skip a rate hike at its upcoming monetary policy meeting in November. This and the escalating tensions in the Middle East pushed traders toward safe-haven assets, including the yellow metal.

As such, gold prices soared from nearly $1,800 per ounce to almost $1,890 on Friday. The price action is now testing the critical intraweek resistance near $1,890, characterized by the former support that gave way in late September. 

A break of this level would pave the way for a quick push to $1,920, where the confluence of the 100-day moving average (DMA) and 200 DMA lies. On the downside, the 100 weekly moving average (WMA) provides support near $1,860.
 

Sticky Inflation and Hot Labor Market Still Unlikely to Bring Another Rate Hike in November

Gold’s latest rally was accelerated after the September CPI report, which showed that the annual inflation rate stood at 3.7% last month. The print compared to economists’ expectations of a 3.6% increase and unchanged from the August reading.

Core inflation, which does not consider energy and food costs, was reported at 4.1%, in line with consensus estimates and down from the previous 4.3%. On a monthly basis, the core CPI rose by 0.3%, also matching the projections. 

Last week, the non-farm payroll (NFP) report revealed that the US economy added 337,000 jobs in September, twice the consensus estimates. The data showed that the US labor market remains incredibly robust despite a series of interest rate hikes imposed by the Fed over the past year and a half.

Nonetheless, while most recent waves of economic data point to sticky inflation, it is unlikely that it will influence the US central bank to impose another quarter-percentage hike at the November policy meeting. Instead, the Fed previously hinted at plans to keep rates ‘higher for longer’ – a message that largely contributed to the recent bond market rout. 

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