Gold rises on weaker greenback ahead of US inflation data release

GOLD prices rose on Monday as the US dollar slipped after last week’s rally though investors are watching for inflation data from the US later this week for signs of the intensity of expected US interest rate increases.

Spot gold rose 0.60% to $1,323.68 per ounce at 0435 GMT. Last week, the precious metal fell 1.2% for a second consecutive weekly decline.

US gold futures for April delivery rose 0.80% to $1,326.30 per ounce.

“Gold has picked up a little in the last 24 hours, as a hint of dollar weakness creeps back into markets,” said Jordan Eliseo, chief economist at gold trader ABC Bullion.

The dollar index, a measure of the greenback against a basket of six major currencies, fell 0.34% to 90.137. Last week the index rose 1.4% because of a flight to safer assets amid a rout in global equity markets.

A weaker greenback makes dollar- denominated gold less expensive for holders of other currencies.

US consumer price data will be released on Wednesday that should give clearer signs on the pace of inflation and with it the frequency of the anticipated interest rate rises. Concerns of rising inflation triggered the global equity drop last week.

“After last week’s sell-off in risk assets, we expect gold to be well supported, especially if volatility in financial markets persists,” Mr. Eliseo said.

Last week, the benchmark S&P 500 fell 5.2%, its biggest decline since January 2016.

“The uptick in prices today is not so much safe-haven buying, but more so potential short covering behavior by market watchers,” said OCBC analyst Barnabas Gan. “It’s just common sense for some portfolio managers to exhibit some short-covering behavior especially after the sell-off we saw last week.”

Gold prices slipped 2.5% in the prior two weeks before Monday.

Spot gold is expected to end its current bounce in a resistance zone of $1,325 to $1,330 per ounce and then revisit its Feb. 8 low of $1,306.81, said Reuters technical analyst, Wang Tao.

In other precious metals, silver gained 0.60% to $16.45 per ounce.

Platinum rose 0.60% to $970.00 per ounce, while palladium was up 0.80% to $ 984.00 per ounce. —