Gold flat as traders focus on US inflation data

[BENGALURU] Gold prices were flat on Wednesday (Jan 12), as traders focused on US inflation data for rate clues after less hawkish comments from the Federal Reserve chief fuelled a bullion rally last session.

Spot gold was little changed at US$1,819.51 per ounce by 1.35 am GMT. US gold futures were up 0.1 per cent at US$1,819.80.

Fed Chairman Jerome Powell said the central bank was determined to ensure that high inflation did not become "entrenched", and that far from diminishing job growth, a turn to higher policy interest rates and a runoff of its asset holdings was necessary to keep the current economic expansion underway.

Benchmark 10-year yields dipped as more aggressive rate hikes are also seen as likely to dent growth and inflation longer-term. The yield had reached 1.808 per cent on Monday (Jan 10), its highest since Jan 21, 2020.

Gold is considered a hedge against higher inflation, but the metal is highly sensitive to rising US interest rates which increase the opportunity cost of holding non-yielding bullion.

The dollar slid to its weakest since November against major peers, after Powell said it may take several months to make a decision on running down the central bank's US$9 trillion balance sheet.

US inflation data is due at 1.30 pm GMT, with core CPI, which excludes food and energy prices, seen rising by 5.4 per cent, its highest in decades and up from 4.9 per cent in the prior month.

Spot silver shed 0.1 per cent to US$22.73 an ounce, platinum fell 0.4 per cent to US$967.43, and palladium was flat at US$1,920.67.

REUTERS