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All eyes on CPI data due at 1230 GMT
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A soft inflation print could send gold above $2,032 - analyst
(Adds comment, updates prices)
By Kavya Guduru
April 12 (Reuters) - Gold prices gained on Wednesday as
investors keenly await key U.S. inflation data for signs of how
close interest rates are to peaking.
Spot gold was up 0.7% at $2,017.09 per ounce, as of
0624 GMT. U.S. gold futures rose 0.7% to $2,032.60.
All eyes are on the U.S. consumer price index (CPI) data,
due at 1230 GMT, for clues on the Federal Reserve's rate hike
path.
Gold is considered an inflation hedge, but rising interest
rates reduce the appeal of non-yielding bullion.
Gold could continue to drift higher "as early birds place
their bets on a soft inflation report," said Matt Simpson,
senior market analyst at City Index.
"A soft inflation print could send gold prices above $2,032
to mark a fresh YTD high, given the inverted yield curve, talks
of soft growth and rise of geopolitical tensions across parts of
Asia." Philadelphia Fed Bank President Patrick Harker on Tuesday
said he feels the Fed may soon be done raising rates, while New
York Fed President John Williams said the Fed's policy path will
depend on incoming data.
The CME FedWatch tool shows markets pricing in a 67.2%
chance of a 25 basis-point hike in May following a strong U.S.
employment report last week, but standing pat thereafter.
Chicago Fed President Austan Goolsbee said the central bank
should be cautious about raising rates in the face of recent
banking stress. Bullion had broken above $2,000 after the sudden
collapse of two U.S. regional lenders in March.
A "weaker U.S. dollar and returning investment flows have
been holding (gold) prices, ANZ said in a note. Spot silver climbed 0.9% to $25.31 per ounce.
Bond markets are positioning and trading for a
hotter-than-expected CPI print, but gold and silver are ignoring
these signals and remaining quite bid, metals firm MKS PAMP said
in a note.
Platinum gained 0.8% at $1,002.03 and palladium added 0.7% at $1,455.92.
(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu
Sahu, Sonia Cheema and Uttaresh Venkateshwaran)
