Gold firms as US inflation data fuels bets for rate hike pause

April 13 (Reuters) – Gold prices rose for a third consecutive session on Thursday, as softer-than-expected US inflation data prompted bets that the Federal Reserve might raise rates just once more before pausing.

Spot gold was up 0.3% at USD 2,020.52 per ounce, as of 0700 GMT. US gold futures rose 0.5% to USD 2,035.20.

Gold prices rose over 1% on Wednesday after data showed the US Consumer Price Index (CPI) rose 0.1% last month, compared with expectations of a 0.2% increase, after advancing 0.4% in February.

“Expectations that the Fed’s hiking cycle may be nearing its end are well-anchored by the recent US CPI data, with lower Treasury yields and a weaker dollar being supportive of gold prices,” said Yeap Jun Rong, a market analyst at IG.

The CME FedWatch tool shows markets are pricing in a 66.2% chance of a 25 basis point hike in May, with rate cuts seen in the second half of the year.

Rising interest rates reduce the appeal of non-yielding bullion.

Gold might retest a resistance at USD 2,032, Reuters technical analyst Wang Tao said.

San Francisco Fed Bank President Mary Daly on Wednesday said while the Fed had “more work to do” on rate hikes, tighter credit conditions could argue for a pause.

Richmond Fed President Thomas Barkin said the Fed had more work to do in bringing inflation down to its 2% target because the latest data on price pressures was not sufficiently weak.

Minutes from the Fed’s March meeting also showed several policymakers considered pausing rate increases after a forecast that banking sector stress would tip the economy into recession.

Recession concerns are “allowing gold prices to ride on its safe-haven status… while technical conditions are revealing some moderation in upward momentum on recent highs,” IG’s Yeap said.

Spot silver fell 0.1% to USD 25.45 per ounce, platinum edged up 0.1% to USD 1,016.44 and palladium eased 0.1% to USD 1,458.66.

(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu Sahu and Emelia Sithole-Matarise)