PRECIOUS-Gold steady as investors seek direction from U.S. inflation data

  • 10/13/2021
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* U.S. consumer price inflation data due at 1230 GMT * Dollar eases off a more than one-year high (Updates prices) Oct 13 (Reuters) - Gold held steady on Wednesday, underpinned by a slight pullback in the dollar and U.S. Treasury yields, as investors awaited U.S. inflation data to gauge the Federal Reserve’s path on normalising policy. Spot gold rose 0.1% to $1,762.00 per ounce by 0654 GMT, while U.S. gold futures were up 0.2% at $1,762.50. The dollar index was down 0.2%, after hitting a more than one-year high in the previous session. The benchmark U.S. 10-year Treasury yield fell from a more than four-month peak scaled on Tuesday. “We’re going to get U.S. CPI data and those critical minutes from the September FOMC meeting, so I think there is capacity there for gold to get a directional catalyst after this period of consolidation,” DailyFX currency strategist Ilya Spivak said. “If CPI registers hotter, then we are probably looking at expectations that the Fed could need to move faster in raising rates.” The U.S. consumer price inflation data is due at 1230 GMT, while the minutes from the Fed’s Sept. 21-22 policy meeting will be released at 1800 GMT. Three Fed policymakers said on Tuesday the economy has healed enough for the central bank to begin withdrawing its crisis-era support, cementing expectations the Fed will start tapering as soon as next month. Meanwhile, money markets are charging ahead with pricing aggressive interest rate hikes as inflationary pressures mount globally. Reduced central bank stimulus and interest rate hikes tend to push government bond yields up, translating into a higher opportunity cost for holding gold that pays no interest. There was also an increase in risk aversion ahead of the U.S. earnings season, Jeffrey Halley, a senior market analyst for Asia-Pacific at OANDA, said in a note. The threat of Fed taper should cap gold’s rally and the bias is still towards the downside in the coming weeks, he said. Spot silver climbed 0.6% to $22.67 per ounce, platinum fell 0.1% to $1,006.70 and palladium rose 0.2% to $2,048.62. (Reporting by Eileen Soreng in Bengaluru; Editing by Krishna Chandra Eluri and Subhranshu Sahu) Our Standards: The Thomson Reuters Trust Principles.

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