By Amrith Ramkumar and David Hodari
Gold prices rose for the third straight session Friday after new data showed U.S. consumer prices rose in December, a sign that inflation ended the year on a somewhat stronger note.
Front-month gold for January delivery climbed 1% to $1,323.40 a troy ounce on the Comex division of the New York Mercantile Exchange -- its best day since November. Prices have risen in five straight weeks to their highest level since September, supported by a weaker dollar and investor bets on higher inflation. A dollar-denominated commodity, gold becomes cheaper for overseas buyers when the U.S. currency weakens. The precious metal is also used by many investors as a hedge against higher consumer prices.
Friday's data showed the consumer-price index rose 0.3% in December when excluding the often-volatile categories of food and energy, the largest increase for so-called core prices since January 2017.
Some analysts have said stronger economic data could weigh on gold prices if it gives the Federal Reserve a freer hand to raise interest rates more aggressively than expected. But Bill O'Neill, co-founder of Logic Advisors, said Friday's data shouldn't change expectations for the central bank's plans. Gold struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise.
"There's a perception that the Fed will remain pretty benign," he said.
One reason gold prices rose Friday was the dollar extended its recent fall and was on track for a fifth consecutive week of declines. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, fell 0.7%.
"I think today you're looking much harder at the dollar than anything else," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
Among base metals, front-month copper for January delivery swung between small gains and losses and closed down 0.4% at $3.20 a pound. The rally that sent the industrial metal to four-year highs late last year has paused recently, but some analysts expect favorable demand from China, the world's largest consumer, and supply disruptions to continue supporting prices.
Chinese copper imports fell slightly in December from the previous month but were still at their second-highest level of the year, Citi analysts said in a note to clients.
Write to Amrith Ramkumar at [email protected] and David Hodari at [email protected]