Gold prices were oscillating in a $5 range on Monday around $2020. Trading was down due to markets being closed in Asian countries to celebrate the Lunar New Year, which meant markets for precious metals were slow at the beginning of the week. Gold struggled for momentum and there was no indication of a decisive move for gold until Tuesday when the CPI statistics for January were released. 

After a strong US inflation report, the US dollar shot up to a three-month high, bringing the spot price of precious metals along with stock and bonds down. The US inflation report showed that CPI was 3.1% in January, up 0.2% from the predicted 2.9% prior. The higher CPI data disappointed investors who were hoping for an early rate cut in March. The Federal Reserve chair commented that the rate cut in March would be highly unlikely and that the high CPI numbers reinforced the Federal Reserve’s decision to delay rate cuts until May, possibly June. 

The high CPI means the spot price of metals will drop since investors are not willing to part with the US dollar due to its current strength and it raises the opportunity cost of holding the metals. Gold was down 1% this week after the announcement and silver was down 2%. The spot price of gold slightly rebounded on Thursday, and bounced back above $2000, indicating that the precious metals industry is still healthy.