*
U.S. CPI comes in below estimates, core in line with
estimates
*
Fed meeting minutes at 1400 EDT
*
Dollar down 0.7%, yields skid
(Adds comments, details and updates prices)
By Deep Kaushik Vakil and Seher Dareen
April 12 (Reuters) - Gold jumped on Wednesday as signs
of cooling inflation bolstered bets that a pause in U.S. rate
increases was imminent, although traders positioned for one more
hike in May with minutes from the Federal Reserve's March
meeting also in focus.
Spot gold was up 0.5% at $2,012.42 per ounce by 10:25
a.m. EDT (1425 GMT), after rising as much as 1.3% earlier. U.S.
gold futures rose 0.4% to $2,027.50.
The Consumer Price Index (CPI) climbed 0.1% in March after
advancing 0.4% in February, compared with a forecast of 0.2%
gain in a Reuters poll. But in the 12 months through March, the
core CPI gained 5.6%, after rising 5.5% on the same basis in
February.
"The risks of not raising rates enough far exceeds
over-tightening so the Fed is probably going to go forward with
the quarter-point rate hike, the core justifies it," said Edward
Moya, senior market analyst at OANDA.
"There's still a tremendous amount of risk on the table, so
gold should still see some strong flows headed its way."
Gold drew strength from a slide in the dollar and benchmark
U.S. yields . Markets are now pricing in a 67% chance of a 25-basis-point
rate hike in the May meeting, followed by 2-to-1 bets of a pause
in June.
While gold is seen as a hedge against inflation, higher
rates to tame rising price pressures weigh on the non-yielding
asset's appeal.
Traders now await the minutes of the Fed's March meeting due
at 1800 GMT (2 p.m. ET).
"The Fed minutes will be closely scrutinised for key insight
into how policymakers evaluated the need for higher rates
despite the turmoil in the banking sector," said Lukman Otunuga,
senior research analyst at FXTM.
Silver gained 0.9% at $25.29 per ounce, platinum added 2.1% at $1,015.51 and palladium rose 0.91%
to $1,459.39.
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Gold rally ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Deep Vakil and Seher Dareen in Bengaluru; editing
by Jonathan Oatis and Shilpi Majumdar)
