Gold climbs as dol­lar weak­ens ahead of US in­fla­tion data re­lease

Business World - - WORLD MARKETS -

NEW YORK/LON­DON — Gold prices rose on Tues­day as the US dol­lar slipped and mar­kets an­tic­i­pated the re­lease of im­pend­ing US in­fla­tion data that may of­fer some clues on the pace of fu­ture US in­ter­est rate in­creases.

The dol­lar dropped against a bas­ket of ma­jor world cur­ren­cies, re­vers­ing some of last week’s gains, when it en­joyed its best per­for­mance since 2016.

A re­treat in the dol­lar, in which bul­lion is priced, has helped gold pull back nearly 2% from last week’s one- month low of $1,306.81 an ounce.

Spot gold was up 0.40% at $1,327.52 per ounce by 1:34 p.m. EST (1834 GMT), ear­lier hit­ting a one- week high of $ 1,330.89 while US gold fu­tures for April de­liv­ery set­tled up $4, or 0.30%, at $1,330.40.

While bul­lion is some­times seen as a safe haven as­set against risk, it ben­e­fited lit­tle last week from the slide in eq­ui­ties as in­vestors mov­ing out of stocks broadly sought refuge in the dol­lar.

“The weaker US dol­lar in­dex re­ally pro­vides some un­der­ly­ing sup­port for gold to­day,” said Phillip Streible, se­nior com­modi­ties strategist at RJO Fu­tures. “Some of the in­vestors are a lit­tle more con­fi­dent with the chart ac­tion of gold since it held the 50-day mov­ing av­er­age.”

US bond yields and world eq­uity mar­kets dipped ahead of a widely an­tic­i­pated US in­fla­tion re­port later this week that may pro­vide some in­di­ca­tion of the pace of fu­ture in­ter­est rate hikes by the Fed­eral Re­serve. “GDP and CPI should be very in­dica­tive to whether the Fed will be able to raise the (in­ter­est) rates or not,” said Wal­ter Pe­howich, ex­ec­u­tive vice-pres­i­dent of in­vest­ment ser­vices at Dil­lon Gage Met­als.

In­fla­tion is some­times re­garded as gold-pos­i­tive, be­cause bul­lion is seen as a safe haven when price pres­sures are ris­ing, but ex­pec­ta­tions that the US Fed­eral Re­serve will lift in­ter­est rates to fight in­fla­tion make the nonyield­ing me­tal less at­trac­tive.

Mean­while, sil­ver was up 0.20% at $16.57 an ounce, af­ter touch­ing a one-week high of $16.69, while plat­inum was up 0.30% at $973.

Pal­la­dium was up 0.20% at $ 986.40 per ounce. The au­to­cat­a­lyst me­tal has slid nearly 14% since hit­ting a record $ 1,138 in mid-Jan­uary but re­mains at el­e­vated lev­els on ex­pec­ta­tions that the mar­ket will re­main in deficit for a while yet.

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