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Gold price action sensitive to U.S. inflation, employment
data-
analyst
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Markets pricing in Fed 25-bps rate hike in May
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U.S. dollar down 0.1%
(Adds graphic and details, updates prices)
By Kavya Guduru
April 17 (Reuters) - Gold rose on Monday as the dollar
eased slightly but prices were off one-year highs hit last week,
as mixed economic data prompted investors to reassess the U.S.
Federal Reserve's interest rate hike trajectory.
Spot gold was up 0.5% at $2,012.62 per ounce, as of
0646 GMT. U.S. gold futures rose 0.4% to $2,024.70.
The dollar index was 0.1% lower, making bullion
cheaper for overseas buyers. Gold is likely to trade with "positive bias but can see some
initial correction...a major downfall" in prices is not expected
as uncertain global economic and geopolitical tensions support
its safe-haven status, said Hareesh V, commodity research head,
Geojit Financial Services.
Gold dropped 2% on Friday after data showed resilience in
U.S. core retail sales in March.
Other data showed households expected inflation to rise over
the next 12 months. Separately, production at U.S. factories
fell in March, but eked out a modest gain in the first quarter.
"Gold also maintains a strong correlation with real yields,
and price action continues to be sensitive to U.S. inflation and
employment data," Standard Chartered analyst Suki Cooper said in
a note. On Friday, Fed Governor Christopher Waller said U.S. central
bankers need to move interest rates higher still, while Atlanta
Fed President Raphael Bostic said one more
quarter-percentage-point hike can allow the Fed to end its
tightening cycle.
The CME FedWatch tool shows markets are pricing in a 82.2%
chance of a 25 basis point hike in May, dimming non-yielding
bullion's appeal.
"While $2,075-$2,100/oz remains a key hurdle...we remain
biased for a grind higher," Citi said in a note, adding
financial stability stress present positive tailwinds for
long-duration safe-haven assets such as gold.
Spot silver rose 0.5% to $25.45 per ounce, platinum dipped 0.3% to $1,042.01 and palladium fell 0.5%
to $1,496.41.
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(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu
Sahu and Sonia Cheema)
