Gold climbs as dollar weakens ahead of U.S. inflation data

Gold climbs as dollar weakens ahead of U.S. inflation data
* Dollar edges down versus currency basket
* Markets eye U.S. inflation data due on Wednesday
* GRAPHIC-2018 asset returns:

(Recasts throughout, updates prices; adds comment, NEW YORK to
By Renita D. Young and Jan Harvey
NEW YORK/LONDON, Feb 13 (Reuters) - Gold prices rose on
Tuesday as the U.S. dollar slipped and markets anticipated the
release of impending U.S. inflation data that may offer some
clues on the pace of future U.S. 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 percent from last week's
one-month low of $1,306.81 an ounce.
Spot gold was up 0.4 percent 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 U.S. gold futures futures for April
delivery settled up $4, or 0.3 percent, 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 U.S. 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."
U.S. bond yields and world equity markets dipped ahead of a
widely anticipated U.S. 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 U.S. Federal Reserve will lift
interest rates to fight inflation make the non-yielding metal
less attractive.
Meanwhile, silver was up 0.2 percent at $16.57 an
ounce, after touching a one-week high of $16.69, while platinum
was up 0.3 percent at $973.
Palladium was up 0.2 percent at $986.40 per ounce.
The autocatalyst metal has slid nearly 14 percent 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
"Over time, prices will provide the incentive to right
palladium's balance, driving substitution in autocatalysts and
industrial uses, as well as supporting the expansion of both
recycling and new production capacity," ICBC Standard Bank said
in a note.

(Additional reporting by Eileen Soreng in Bengaluru; Editing by
Bernadette Baum)

First Published: 2018-02-13 03:27:46
Updated 2018-02-13 20:45:39

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