Global gold price gain on weaker dollar ahead of US inflation data
Gold prices hit a near one-week high on Tuesday, helped by a weaker dollar and as investors awaited US inflation data for clues on the pace of interest rate hikes.
Spot gold was up 0.4% at $1,327.81 an ounce, as of 1.01pm. Earlier, it hit the highest since 7 February at $1,328.03. On Monday, the yellow metal rose 0.5%, its biggest single-day%age gain in more than one week. US gold futures were up 0.3% at $1,330 per ounce.
“We suspect that gold has pretty much decoupled from equities for much of the last week and is instead tracking the dollar’s ups and downs more closely,” said INTL FCStone analyst Edward Meir.
The dollar index, which tracks the greenback against a basket of six major currencies, was last down 0.4% at 89.9, its biggest one-day percentage drop since 1 February.
Meanwhile, Asian stocks pulled further away from two-month lows on Tuesday, lifted by Wall Street’s extended rebound from last week’s steep fall.
“Gold held up better than stock markets last week... Relative to stocks, gold looks to be good in value and continued volatility in the equity markets might make gold more attractive for its lower volatility,” analysts at Heraeus Precious Metals said in a note. “So far, gold investors have been largely unconcerned. While demand for investment bars increased slightly, ETFs posted outflows with total holdings falling.”
Holdings of SPDR Gold Trust , the largest gold-backed exchange-traded-fund (ETF), fell 2.5% last week, the worst since the week ended 30 July.
Meanwhile, investors waited for US January inflation data, which is due on Wednesday. Inflation expectations edged lower last month, dulling a year-end rise, according to a survey published by the Federal Reserve Bank of New York on Monday.
Inflation worries generally boost gold, which is seen as a safe haven against rising prices. But expectations that the Fed will raise interest rates to fight inflation make gold less attractive because it is not interest-yielding.
In other precious metals, silver gained 0.4% to $16.61 per ounce, platinum rose 0.1% to $971.5 per ounce and palladium dipped 0.3% to $981.45 per ounce. Reuters