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The gold price took a sharp decline on Wednesday (Feb. 15) following the release of the U.S. consumer price index (CPI) data report.

As of 12:45 p.m. EST Wednesday, the yellow metal was trading at US$1,854.61 on the heels of the CPI data report indicating a slight inflation increase of 0.5 per cent in January, up from 0.4 per cent in December’s report.

According to the statement released by the US Bureau of Labor Statistics, CPI data was up 6.4 per cent year-on-year, which was previously forecasted to be up 6.2 per cent compared to the 6.5 per cent increase in December’s report. Moving forward, the potential for the Federal Reserve to raise interest rates could continue to pressure gold prices.

As a result, the gold price dipped to a more than one-month low on Wednesday as the US dollar simultaneously rose to a one-month high.

Carsten Menke, head of Next Generation Research at Julius Baer, said that gold and silver would benefit if the Federal Reserve reduced interest rates as signs of a recession continue to gain momentum.

In early February, gold reached $1,949 per ounce — its highest level since April 2022 — fueled by China’s reopening and increased demand. Year-to-date, gold is up from $1,829.04 per ounce to $1,854.61, representing a 1.39 per cent increase.

Historically, gold prices tend to fare well during times of economic uncertainty and when inflation rises as investors flock from fiat currencies and into the hands of the yellow metal.

Moving forward, it is expected to trade around $1,888 per ounce by the end of Q1 2023.

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