PRECIOUS-Gold gains on softer dollar as focus turns to US inflation data

BY Reuters | ECONOMIC | 05/15/24 06:14 AM EDT

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U.S. CPI data due at 1230 GMT

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Platinum hits near one-year peak

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Fed's Powell expects inflation to ease

(Updates prices as of 0943 GMT)

By Harshit Verma

May 15 (Reuters) - Gold prices rose on Wednesday, taking support from a weaker US dollar and lower Treasury yields, while investors awaited US consumer inflation data that could offer clues on how soon the Federal Reserve can cut interest rates.

Spot gold rose 0.5% to $2,368.62 per ounce, as of 0943 GMT. U.S. gold futures rose 0.6% to $2,374.40.

The U.S. consumer price index data is due at 1230 GMT. Core inflation in April is seen rising 0.3% month-over-month, down from 0.4% the prior month, based on a Reuters poll.

"The focus of the financial markets is firmly set on the US consumer price index after yesterday's producer price data, seemed to have taken some of the heat off the US dollar and treasury yields, and offered support to gold," said Ricardo Evangelista, senior analyst at ActivTrades.

The dollar fell 0.2% against a basket of currencies to hit a nearly two week low, making gold less expensive for other currency holders. Benchmark 10-year Treasury yields hit a more than one month low.

Gold prices rose nearly 1% on Tuesday even as data showed that U.S. producer prices increased more than expected in April. Fed Chair Jerome Powell said he expects U.S. inflation to continue declining through 2024 and noted it was unlikely the central bank would have to raise interest rates again.

"If the CPI starts to come down a little bit, it will be positive for gold as it is in a fantastic position to capitalize on that dynamic considering its resilience to this point," said Kyle Rodda, a financial market analyst at Capital.com.

Last week's lacklustre labour market data has increased expectations for rate reductions by September.

Spot silver rose 0.9% to $28.83 per ounce and palladium gained 1.9% to $996.90.

Platinum climbed 1.1% to $1,041.97, hitting a near one-year high.

(Reporting by Harshit Verma and Sherin Elizabeth Varghese in Bengaluru; Editing by Jane Merriman)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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