Gold trades below two-week highs as US inflation data stokes rate worries
GOLD prices edged up on Friday (Oct 13) but traded below two-week highs hit in the last session, as a bigger-than-expected jump in US consumer prices boosted bets interest rates would stay high for longer, lifting US dollar and bond yields from their recent lows.
Spot gold was up 0.2 per cent to US$1,872.20 per ounce by 0058 GMT, after touching its highest level since Sep 27 at US$1,884.79 on Thursday. US gold futures added 0.1 per cent to US$1,884.70.
Gold is still on track for a more than 2 per cent rise this week, the most since mid-March, as military clashes between Israel and the Palestinian Islamist group Hamas boosted demand for safe-haven bullion.
Gold is seen as a safe-haven investment during times of economic uncertainty, but as it yields no interest, it tends to lose its attraction when interest rates rise.
US Treasury yields rose and the US dollar strengthened, while global stock markets fell after data on Thursday showed US consumer prices increased in September amid a surprise surge in rental costs.
Traders see a stronger chance the US Federal Reserve would end up delivering another interest-rate hike this year, and keep rates higher for longer next year.
Fed Bank of Boston president Susan Collins said the latest inflation data underscores uneven progress towards restoring price stability, reiterating her view that the central bank might have to raise rates again to combat inflation.
European Central Bank policymakers expressed cautious optimism on Thursday that inflation was on its way back to 2 per cent even without more rate hikes.
In other metals, spot silver rose 0.3 per cent to US$21.90 per ounce, platinum fell 0.2 per cent to US$866.68 and palladium shed 0.4 per cent to US$1,139.73. REUTERS
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