Moderate gains for bullions

Prices rise despite the dollar remaining strong

Bullion prices ended moderately higher on Friday, 16 January 2015 at Comex. Gold prices moved higher despite a weak reading on U.S. inflation which helped the dollar regain some strength. Gold generally benefits from volatile markets, as was the case on Thursday, and signs of inflation.

Gold for February delivery rose $12.10 to close at $1,276.90 an ounce.

March silver rose 65 cents to settle at $17.75 an ounce in New York trading.

On Friday, the U.S. reported the biggest drop in consumer inflation in six years. Consumer prices across the European Union fell for the first time on record.

The dollar, meanwhile, was generally higher, as the Swiss franc gave up some of Thursday's hefty gains that came when the Swiss National Bank scrapped its currency cap.

Latest economic data at Wall Styreet showed that the CPI declined 0.4% in December after declining 0.3% in November while the consensus expected a decline of 0.4%. Prices are up only 0.8% year-over-year, which is the smallest increase since October 2009. The energy index, which has fallen for the past six consecutive months, declined 4.7% in December. Food prices increased 0.3% in December, up from a 0.2% increase in November. Excluding food and energy, core CPI was flat in December (consensus +0.1%) after increasing 0.1% in November.

Also, industrial production declined 0.1% in December after increasing an unrevised 1.3% in November (consensus -0.1%). The decline in industrial production can be blamed on warmer-than-normal temperatures that reduced the demand for heating. According to the National Climatic Data Center, December 2014 was the second warmest December on record. That was a large reversal from November, which was the coldest November since 2000. The shift in temperatures resulted in a 7.3% decline in utilities production.

The University of Michigan Consumer Sentiment Index jumped to 98.2 in the preliminary January reading from 93.6 in December while the consensus expected an increase to 94.1. That was the highest reading since the index reached 103.8 in January 2004.

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