February 15, 2018 / 4:59 AM / 7 months ago

PRECIOUS-Gold inches up as inflation concerns drive hedging

    * Spot gold may rise to $1,372/oz - technicals
    * Gold has gained almost 4 pct since Feb 8

 (Updates prices)
    By Eileen Soreng
    Feb 15 (Reuters) - Gold prices edged up on Thursday as the
dollar weakened and investors banked on the bullion as a hedge
against inflation after data showed a rise in U.S. consumer
prices.
    Spot gold        was up 0.3 percent at $1,354.34 an ounce as
of 0745 GMT and headed for a fourth straight session of gains.
    It hit its highest since Jan. 26 at $1,355.50 on Wednesday,
and has gained nearly 4 percent since it dropped to a one-month
low last week.
    U.S. gold futures         were down 0.1 percent at $1,356.8
per ounce on Thursday.
    "Higher U.S. inflation combined with the US dollar
exhibiting zero correlation to higher interest rates amidst
burdening duel deficits (trade and budget) should play out
favourably for gold markets," said Stephen Innes, head of
trading APAC at OANDA said.    
    The dollar index        against a basket of currencies was
down 0.5 percent at 88.660, after earlier hitting a near
two-week low of 88.585.
    A recovery in broader risk sentiment was also seen weighing
on the dollar, which had gained during the market turmoil
earlier this month.       
    The U.S. currency has been hit by a variety of setbacks this
year, including from prospects Washington might pursue a weak
dollar strategy to the perceived erosion of its yield advantage
as other countries part with easier monetary policy. Concerns
about the growing U.S. fiscal deficit have also weighed on the
greenback.
    The U.S. Labor Department said its Consumer Price Index
increased 0.5 percent in January as households paid more for
gasoline, rental accommodation and healthcare, raising pressure
on new Federal Reserve chief Jerome Powell to prevent a possible
overheating of the economy.             
    Inflation fears 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
since it is not interest-yielding.
    "Gold's technicals have improved dramatically in light of
Wednesday's surge and could draw further fund buying," said INTL
FCStone analyst Edward Meir.
    Spot gold is expected to break a resistance at $1,357 per
ounce and rise to the next resistance at $1,372, driven by a
wave C, according to Reuters technical analyst Wang Tao.
        
    Among other precious metals, silver        was up 0.3
percent at $16.92 an ounce after earlier hitting a more than
one-week high of $16.94. 
    Palladium        was 1.2 percent higher at $1,011.47, after
earlier hitting a one-week top of $1,013.30. 
    Platinum        was up 0.3 percent at $999.49, after earlier
hitting $1,003.90, its highest in nearly two weeks.

 (Reporting by Eileen Soreng in Bengaluru; Editing by Amrutha
Gayathri and Subhranshu Sahu)
  
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