Gold ticks up as dollar softens after cooler US inflation data

GOLD prices inched higher on Thursday (Apr 13), helped by a softer dollar as cooler-than-expected US inflation data suggested that the Federal Reserve might pause raising rates after a possible hike in May.

Spot gold was up 0.1 per cent at US$2,017.19 per ounce, as of 0105 GMT. US gold futures rose 0.4 per cent to US$2,032.50.

The dollar index was 0.1 per cent lower, making bullion cheaper for buyers holding other currencies.

Gold prices jumped more than 1 per cent on Wednesday after data showed the US Consumer Price Index rose 0.1 per cent last month versus expectations of a 0.2 per cent rise, after advancing 0.4 per cent in February.

The CME FedWatch tool shows markets pricing in a 70.4 per cent chance of a 25 basis-point hike in May but with rate cuts seen in the back half of the year.

Gold is considered an inflation hedge, but rising interest rates reduce the appeal of non-yielding bullion.

San Francisco Fed Bank president Mary Daly said on Wednesday while the Fed had “more work to do” on rate hikes, tighter credit conditions could argue for a pause.

Richmond Fed president Thomas Barkin said the Fed had more work to do in bringing inflation down to its 2 per cent target because the latest data on price pressures was not sufficiently weak.

Minutes from the Fed’s March meeting showed several policymakers considered pausing rate increases after a forecast from Fed staff that banking sector stress would tip the economy into recession, but concluded that high inflation remained the priority.

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Gold ticks higher in run-up to US inflation data

Spot silver was up 0.1 per cent at US$25.51 per ounce, platinum added 0.2 per cent at US$1,017.30 and palladium rose 0.5 per cent to US$1,466.82. REUTERS