Gold ticks higher as dollar weakness offsets rate-hike bets

GOLD prices edged up on Wednesday (Feb 15) as the dollar eased, while US inflation data released on Tuesday raised expectations that the Federal Reserve will persist with monetary policy tightening.

Spot gold was up 0.1 per cent at US$1,856.47 per ounce, as of 0105 GMT. US gold futures were little changed at US$1,865.80.

The dollar index eased 0.1 per cent, making greenback-priced gold less expensive for buyers holding other currencies.

The consumer price index increased 0.5 per cent last month, the Labour Department said on Tuesday, in line with expectations. In the 12 months through January, the CPI increased 6.4 per cent which was the smallest gain since October 2021 and followed a 6.5 per cent rise in December.

Fed officials said the US central bank would need to keep gradually raising interest rates to beat inflation and suggested sticky price pressures driven by a hot jobs market may push borrowing costs higher than they once thought.

Rising interest rates discourage investors from placing money in non-yielding assets like gold.

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Gold inches higher, spotlight on US inflation data

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Money markets now expect the Fed’s target rate to peak at 5.257 per cent in July, from a current range of 4.50 per cent to 4.75 per cent.

European Central Bank governing council member Gabriel Makhlouf said the bank could increase interest rates above 3.5 per cent and likely will not cut them again this year, in an interview with the Wall Street Journal.

Spot silver edged up 0.1 per cent to US$21.86 per ounce and platinum rose 0.3 per cent to US$933.05. Palladium rose 0.3 per cent to US$1,501.08, after hitting its lowest since late-August 2019 in the previous session. REUTERS