Gold advances after tame US inflation data eases rate hike bets
This reduces the likelihood that the Fed will tighten monetary policy at its next meeting in September
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GOLD advanced to a two-month high after a subdued US inflation report relieved near-term pressure on the US Federal Reserve to hike interest rates.
Bullion climbed as much as 0.9 per cent to near US$4,450 an ounce, adding to a similar gain on Wednesday (Aug 12) after data showed consumer prices rose just 0.1 per cent in July from June.
The latest report suggests the impact of the energy-price shock from the Iran war continued to fade in July.
The data reduces the likelihood that the Fed will tighten monetary policy at its next meeting in September.
Before then, additional reports on employment and inflation are expected, while investors will also be focused on Fed chairman Kevin Warsh’s remarks at the central bank’s annual Jackson Hole symposium later in August.
Higher rates are typically a negative for gold, which does not pay interest.
Still, any further flare-ups in the Middle East risk a return to the higher energy prices that have underpinned inflationary risks since the war began.
Oil is heading for a weekly gain after months of volatile trading, with traders tracking on-off efforts by the US and Iran to end the conflict and reopen the Strait of Hormuz.
Gold has rallied above the US$4,000-an-ounce support threshold in recent weeks, with renewed investor appetite for the precious metal backed by an increase in central bank purchases, notably from China.
This week’s gains took the metal above its 100-day moving average for the first time since April.
Spot gold climbed 0.5 per cent to US$4,429.70 an ounce at 8.56 am in Singapore. Silver rose 1 per cent to US$65.94 an ounce, having gained 1 per cent in the previous session.
Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, fell 0.1 per cent. REUTERS
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