Gold climbs as markets await US CPI data to gauge Fed’s stance

Oct 12 – Gold prices hit two-week highs on Thursday as the dollar and Treasury yields stumbled ahead of an eagerly awaited US inflation report that could throw some light on the Federal Reserve’s cautious tilt on interest rates.

Spot gold rose 0.3% to USD 1,879.25 per ounce by 0541 GMT, its highest level since Sept. 27. US gold futures were up 0.3% to USD 1,892.30.

The dollar index and US Treasury yields were rooted near two-week lows, making non-interest-paying gold more attractive.

Minutes of the Fed’s September meeting showed growing uncertainty around the path of the US economy pushed policymakers into a newly cautious stance last month, a position reaffirmed by top Fed officials in a series of statements this week.

“We are almost at the end of interest rate hikes and there could probably be a last one of 25 basis points, which would not have a significant impact on the market because this is largely expected,” said Brian Lan, managing director at Singapore dealer GoldSilver Central.

“But one thing for sure is that people would be expecting interest rates will still continue to remain high … so precious metals price will remain (broadly) subdued.”

High interest rates raise the opportunity cost of holding non-yielding bullion, which is still down over 9% from near record highs hit in May. Investors still see a 26% chance of a rate hike at the Fed’s December meeting.

The consumer price index data, which is expected to show inflation moderated last month, is due later in the day and comes after data on Wednesday showed U.S. producer prices increased more than expected in September, but underlying inflation pressures at the factory gate continued to abate.

Elsewhere, spot silver firmed 0.4% to USD 22.15 per ounce, platinum advanced 0.8% to USD 891.84 and palladium gained 0.7% to USD 1,175.29.

(Reporting by Swati Verma and Anjana Anil in Bengaluru; Editing by Subhranshu Sahu, Rashmi Aich and Sohini Goswami)