Gold ticks higher in run-up to US inflation data

GOLD prices edged higher on Wednesday (Apr 12) as the dollar pulled back, with investors focussing on key US inflation data due later in the day for signs on how close interest rates are to peaking.

Spot gold was up 0.1 per cent at US$2,005.18 per ounce, as of 0051 GMT. US gold futures rose 0.1 per cent to US$2,020.10.

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

All eyes are on the US consumer price index data due at 1230 GMT for clues on the Federal Reserve’s rate-hike path.

Philadelphia Fed president Patrick Harker said on Tuesday he still believes the US central bank needs to get interest rates above 5 per cent and then keep them there to squeeze high inflation out of the economy.

The prospect of the Fed raising rates only once more and in a 25 basis-point increment is a useful starting point but the central bank’s policy path will depend on incoming data, New York Fed president John Williams said.

A strong US employment report last week cemented bets that the Fed would raise interest rates next month. Markets are pricing in a 68.9 per cent chance of a 25 basis-point hike, the CME FedWatch tool shows.

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

Meanwhile, Chicago Fed president Austan Goolsbee said the Fed should be patient about raising rates in the face of recent banking stress and a pullback in bank lending would help quell inflation and leave less for monetary policy to do.

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Gold edges higher on softer dollar; US inflation data in focus

Spot silver was flat at US$25.06 per ounce, platinum added 0.3 per cent at US$997.49 and palladium rose 0.7 per cent to US$1,456.08. REUTERS