The report from the U.S. Bureau of Labor Statistics (BLS), published on Tuesday, showed the easing of price pressures in the world's first economy and contributed to the sharp rise in bullion prices.
The annualized growth of the consumer price index for October slowed to 3.2% from 3.7% in the previous month. Analysts predicted this indicator at a level of 3.3%.
The latest data on inflation in the U.S. demonstrated the effectiveness of the current monetary policy of the Fed and revived investors' confidence in the imminent reduction of interest rates.
The US dollar and bond yields fell as the weak CPI data underpinned risk appetite.
The report also weighed on the 10-year US Treasury yield and the Dollar Index (DXY), which fell to 4.47% and 104.14, respectively.
Following the release of the U.S. inflation data, Federal Reserve Bank of Richmond Governor Thomas Barkin said in a speech that core inflation has been partially offset by supply constraints, but he is not convinced that inflation is smoothly returning to its 2% target. Mr. Barkin emphasized that the Fed needs to do more to curb demand and inflation.
It is worth noting that gold continues to be supported by the military standoff between Israel and Hamas.
Currently, the XAU/USD pair is up 0.54% and is trading at $1,973.18.
If the gold price continues to rise, it will encounter resistance around $1,980, overcoming which will open the way to the psychological mark of $2,000.
See also: XRP price is approaching the critical resistance level of $0.70.