GOLD STRONGER ON US DATA

GOLD advanced more than 1 percent yesterday as Treasury yields eased after US inflation data drove expectations that the Federal Reserve (Fed) may not need to be as aggressive in tightening policy in the longer term.

Spot gold price rose to $1 972.76 (about R28 817) an ounce by 5.32pm, hitting its highest in nearly a month. US gold futures gained 1.5 percent to $1 977.70 an ounce.

The benchmark 10-year US yield slipped after inflation data showed an acceleration in March, but less than many market participants had expected.

“The report provides some optimism that inflation could be peaking here. … That might help the Fed be a little bit less aggressive and tightening policy down the road,” said Edward Moya, senior market analyst with Oanda.

But Moya added that “this doesn’t change anything over the short term”, with the Fed still expected to raise interest rates by a hefty 50 basis points next month to tame inflation.

While gold is considered a safe haven as consumer prices rise, higher interest rates increase the opportunity cost of holding zero-yield bullion.

But the likelihood of aggressive policy measures has also sparked concerns the Fed may make a policy error and cause a recession, in turn bolstering safe-haven gold, analysts said.

Gold continued to find support from developments surrounding Ukraine, with Russian troops massing for a new offensive.

Palladium price dropped 2 percent to $2 383.23 an ounce on profit-taking, after hitting its highest since March 24 at $2 550.58 an ounce on Monday following the suspension of trading of the metal sourced from key producer Russia in the London hub.

Platinum inched 0.2 percent lower to $979.09 an ounce.

Spot silver was up 1.9 percent to $25.55 an ounce. I