Fool's Gold Report: Inflation Data Leave Gold, Metals Little Changed

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The latest report on consumer inflation didn't lead to big waves in the precious-metals markets, as a jump in the headline figure didn't fall through to a corresponding increase in core inflation. As a result, spot gold was up less than $1, to $1,243, with SPDR Gold (NYSEMKT: GLD  ) gaining 0.1%. iShares Silver (NYSEMKT: SLV  ) actually lost a quarter of a percent, with silver falling almost $0.10, to $20.10 per ounce. Platinum-group metals were narrowly mixed, with platinum gaining $1, to $1,426, while palladium gave up $1, to $740.

Image sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

Gold investors hoping for a pickup in inflation didn't get the news they were looking for from the Bureau of Labor Statistics today. Even though December's headline number rose 0.3%, which was the highest level since June, most of the gain came from a substantial jump in energy prices that left the core CPI up just 0.1%. Looking longer term, consumer prices rose a total of 1.5%, marking the first two-year period since 1997 and 1998 that inflation remained below the 2% level that is the Federal Reserve's unofficial target inflation rate. Meanwhile, in Europe, annual inflation rates across the Eurozone were even weaker at 0.8%, with four of the continent's nations posting deflationary trends in December.

But mining stocks continued to do better than the price of gold, with Market Vectors Gold Miners ETF (NYSEMKT: GDX  ) jumping more than 1%. Newmont Mining (NYSE: NEM  ) led the way among major gold producers, rising 1.6% as investors focus on the company's low-cost portfolio of production facilities. As Fool contributor Rupert Hargreaves noted yesterday, Newmont has a substantial portfolio of profitable mines, with even its higher-cost South American properties sporting all-in sustaining cash costs below $1,100 per ounce. If Newmont can follow the trend of its peers in finding ways to cut costs even further, it could lead to higher profits even if gold prices prove unable to rise in the near term.

Meanwhile, precious-metals investors need to keep their eyes on rhetoric from Federal Reserve officials leading up to their next meeting at the end of the month. With so much riding on the future course of monetary policy, investors could see big moves if the Fed deviates from its perceived commitment toward continuing its tapering of quantitative easing.

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