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U.S. CPI up 0.5% in January, in line with Reuters poll
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Palladium touches lowest since late-August 2019
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Benchmark Treasury yields at over five-week high
(Recasts, updates prices, adds palladium comments)
By Seher Dareen
Feb 14 (Reuters) - Gold prices gave up gains accrued due
to dollar weakness on Tuesday to end the session nearly
unchanged as U.S. Federal Reserve officials remained hawkish on
rate hikes, while demand concerns sent auto-catalyst palladium
sliding to its weakest since August 2019.
Spot gold was nearly flat at $1,852.94 per ounce by
2:33 p.m. ET (1933 GMT). U.S. gold futures gained 0.1% to
settle at $1,851.80.
Data showed U.S. CPI rose 6.4% in the 12 months through January - the smallest gain since October 2021. Last month, CPI increased 0.5%, also in line with expectations.
Gold rose by as much as 0.8% on Tuesday after the dollar fell to a near two-week low, but the currency recovered, making gold more expensive for overseas buyers. It is still a concern the Fed might feel the need to be more aggressive in hiking rates and fighting inflationary pressures, which will weigh on gold, said David Meger, director of metals trading at High Ridge Futures. After the CPI data, Richmond Fed President Thomas Barkin and Dallas Federal Reserve President Lorie Logan both said the central bank would need to focus on bringing inflation down to the 2% target.
The Fed is expected to raise its policy rate at least twice more to the 5%-5.25% range, with financial markets retaining about even odds for a further quarter-point hike in the summer. Bullion is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding the zero-yield asset. Benchmark 10-year Treasury yields rose, weighing on gold. Palladium dropped 4.2% to $1,500.18 per ounce, after earlier touching $1,468.94, its lowest since late-August 2019.
"As palladium is being increasingly substituted by platinum
and the number of electric cars is growing, less palladium is
likely to be needed to produce the new vehicles," Commerzbank
analysts wrote in a note.
Spot silver fell 0.6% to $21.84, and platinum slipped 2.3% to $931.61.
(Reporting by Seher Dareen and additonal reporting by Bharat
Govind Gautam in Bengaluru; Editing by Barbara Lewis and Krishna
Chandra Eluri)
