PRECIOUS-Gold prices edge higher as US dollar, yields soften

BY Reuters | ECONOMIC | 05/15/24 09:10 PM EDT

May 16 (Reuters) - Gold prices edged higher on Thursday, supported by a softer dollar and lower Treasury yields after data signalled cooling U.S. inflation, bolstering bets for an interest rate cut by the Federal Reserve.

FUNDAMENTALS

* Spot gold was up 0.3% at $2,393.21 per ounce, as of 0043 GMT. Bullion prices rose 1% on Wednesday.

* U.S. gold futures edged 0.1% higher to $2,397.60.

* The dollar fell 0.2% against a basket of other major currencies, making gold more attractive for other currency holders. Benchmark 10-year Treasury yields hit their lowest in a more than one month.

* U.S. CPI rose 0.3% last month after advancing 0.4% in March and February, suggesting that inflation resumed its downward trend at the start of the second quarter in a boost to financial market expectations for a September interest rate cut.

* Federal Reserve policymakers waiting to see renewed progress on inflation before reducing borrowing costs got some encouraging data on Wednesday with a government report showing inflation eased a bit in April.

* Lower interest rates reduce the opportunity cost of holding non-yielding gold.

* Chicago Federal Reserve Bank President Austan Goolsbee said he was optimistic inflation would continue to come down.

* Escalation of the U.S.-China trade war seems unavoidable whoever wins the White House in November, but the equally inevitable inflationary pressures that brings won't automatically steer the Federal Reserve toward a more hawkish policy stance.

* India's merchandise trade deficit in April was wider than expected, hurt by lower exports and a surge in gold imports, government data showed on Wednesday.

* It's 'green for go' in Asia as stock markets around the world roar to fresh highs, boosted by renewed optimism that the Federal Reserve will soon start cutting U.S. interest rates.

* BHP Group's (BHP) options for its pursuit of rival miner Anglo American include sweetening its $42.7 billion buyout offer, making a hostile bid or walking away for now as it approaches a May 22 deadline to lodge a binding offer.

* Spot silver was unchanged to $29.71 per ounce, platinum was up 0.5% at $1,069.45 and palladium gained 0.3% to $1012.84.

DATA/EVENTS (GMT) 1230 US Housing Starts Number April 1230 US Import Prices YY April 1230 US Initial Jobless Clm Weekly 1230 US Philly Fed Business Indx May 1315 US Industrial Production MM April (Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Sherry Jacob-Phillips)

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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