Gold rises on weak dollar and anticipation of US inflation data

Bengaluru — Gold prices ticked higher on Thursday, aided by a softer dollar, while market participants awaited key US inflation data that could influence the Federal Reserve’s policy path.

Spot gold was up 0.4% to $1,883.95 per ounce at 3.09am GMT. US gold futures also rose 0.4% to $1,886.50.

The dollar index dipped 0.1%, while benchmark US 10-year treasury yields also fell. A weaker dollar makes greenback-priced bullion more appealing to other currency holders.

“Gold prices are very well supported as the dollar has weakened. However, on a technical front bullion is seeing some resistance around $1,880 levels and thus it has been consolidating in a range since few days,” said Ajay Kedia, director at Kedia Commodities, Mumbai.

Investors’ focus remains on the US consumer price index (CPI) data for December due at 1.30pm GMT.

If the inflation report is supportive for gold, then prices could move up to to the $1,900 level, but there might be some profit booking after that, Kedia added.

Boston Federal Reserve bank leader Susan Collins said she is inclined to raise interest rates by a quarter percentage point at the central bank’s upcoming policy meeting, the New York Times reported on Wednesday.

The Fed had raised rates by 75 basis points (bps) four times last year, before slowing to a 50 bps increase in December.

Though gold is seen as an inflation hedge, rising rates increase the opportunity cost of holding bullion.

On the physical front, Indian gold refiners have nearly stopped imports of gold dore, a semi-pure alloy, as grey market operators offer hefty discounts, industry officials said.

Spot silver gained 0.8% to $23.60, platinum rose 0.2% to $1,072.18 and palladium inched 0.1% higher to $1,775.34.

Reuters