Gold crawls higher from three-week lows as US dollar, yields slip

GOLD prices firmed on Thursday (Sep 14) as the US dollar and Treasury yields weakened after the US inflation data cemented the case for a Federal Reserve rate pause next week, although bullion was not far from a near three-week lows seen in the previous session.

Spot gold added 0.3 per cent to US$1,912.09 per ounce by 0110 GMT, having hit its lowest level since Aug 25 on Wednesday at US$1,905.10. US gold futures were up 0.1 per cent at US$1,933.70.

The US dollar index and 10-year Treasury yields eased after US consumer prices increased by the most in 14 months in August as the cost of petrol surged, but the annual rise in underlying inflation was the smallest in nearly two years, suggesting a Fed rate pause next week.

Fed officials hoping for evidence of a clear decline in inflation and a slowing economy got some of each from data since their last meeting, but likely not enough of either to downplay the possible need for further rate increases later this year.

Traders now see a 96 per cent chance of the Fed leaving rates unchanged on Wednesday, while bets of a pause in November were at 51 per cent, according to the CME’s FedWatch Tool.

The European Central Bank is set to decide on Thursday whether to raise its key interest rate to a record peak in what should be its final step in the fight against inflation, or take a break as the economy deteriorates.

SEE ALSO

Gold flat as investors focus on US CPI data

SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.3 per cent to 882.00 tonnes on Wednesday.

Elsewhere, spot silver rose 0.3 per cent to US$22.89 per ounce, platinum gained 0.2 per cent to US$902.05 and palladium eased 0.2 per cent to US$1,257.26. REUTERS