Gold claws way back into the black after Trump sacks Tillerson

NEW YORK/LONDON — Gold prices turned positive on Tuesday as the US dollar lost ground after news that US President Donald Trump replaced Secretary of State Rex Tillerson, while US inflation data was in line with forecasts.

Spot gold was up 0.30% at $1,326.49 an ounce by 1:42 p.m. EDT (1742 GMT), while US gold futures April delivery settled up 0.50% at $1,327.10.

Mr. Trump fired Mr. Tillerson after a series of public rifts over policy on North Korea, Russia and Iran, replacing him with loyalist Central Intelligence Agency Director Mike Pompeo.

“The dollar is lower and gold is higher off the Tillerson news. We’ve been seeing this pattern ( of gold following the dollar) because there’s no other strong factor leading to buying gold now,” said Bill O’Neill, cofounder of Logic Advisors.

The US dollar index relinquished its gains and fell against a basket of currencies, making commodities priced in the greenback cheaper for buyers using other currencies.

Also weighing on the dollar was news that US consumer prices cooled in February, the latest indication that an expected pickup in inflation is likely to be only gradual.

Some investors had been worried stronger-than-expected CPI data could stoke expectations that the US Federal Reserve will raise interest rates four times rather than three this year.

Higher interest rates typically make gold less attractive since it does not bear interest.

“Overall the outlook is not looking that great in the short term. I still expect prices to go towards $ 1,300, said Georgette Boele, ABN AMRO commodity strategist.

Markets are looking to the next Fed meeting for direction on the pace of US interest rate hikes this year.

“As we approach next week’s FOMC day, we should see gold come under pressure as it struggles to compete against interestbearing assets,” said Daniel Ghali, commodities strategist at TD Securities.

Among other precious metals, silver rose 0.60% at $16.59 an ounce.

Platinum was up 0.40% at $ 966.60 an ounce, near a oneweek high of $970.90.

Palladium climbed 1.7% to $995.30 per ounce, after touching a one-week high of $997.40.

The platinum price will struggle to move back above palladium, ING analyst Oliver Nugent said in a note. —