July 29 (Reuters) – Gold bounced to a fresh multi-week peak on Friday with its safe-haven allure getting a fillip as the dollar gave up initial gains following another jump in US inflation, with the current price range also seemingly attracting bids for bullion.
Spot gold rose 0.6% to USD 1,765.76 per ounce by 1:50 p.m. ET (1750 GMT). US gold futures settled 0.7% higher at USD 1,781.80.
US consumer spending increased more than expected in June, with monthly inflation surging by the most since 2005.
The dollar quickly gave up small gains following the data and was last down 0.3%, allowing gold to expand its gains.
The reversal in the dollar, as the markets dig deeper into the data, is pushing metals higher again, said Daniel Pavilonis, senior market strategist at RJO Futures.
Some of it could be safe-haven buying, but overall, it’s just a drive into metals, which are “pretty cheap” at the moment, Pavilonis added.
Gold was still bound for its fourth consecutive monthly drop. It has shed over USD 300 since climbing past the USD 2,000-per-ounce level in March, as the Fed embarked on a rapid rate hike path while the dollar also emerged as a preferred refuge amid growing recession risks.
“If we got some more problematic price inflation numbers, the Fed would have to be more aggressive,” said Jim Wyckoff, senior analyst, Kitco Metals.
Higher rates increase the opportunity cost of holding non-yielding gold.
But gold got some respite, bouncing over 1%, from perception of a relatively less aggressive stance from Fed Chair Jerome Powell on Wednesday following an expected 75 basis-point hike.
Silver rose 1.4% to USD 20.25 per ounce, platinum was up 0.8% at USD 894.92 and palladium jumped 2.5% to USD 2,129.79.
Meanwhile, second biggest gold consumer India launched its first international bullion exchange to bring transparency to the market.
(Reporting by Eileen Soreng, Arundhati Sarkar and Kavya Guduru in Bengaluru; Editing by Shailesh Kuber and Krishna Chandra Eluri)