February 13, 2018 / 10:43 AM / a year ago

PRECIOUS-Gold climbs as dollar weakens ahead of U.S. inflation data

    * Dollar edges down 0.4 pct versus the euro
    * Markets eye U.S. inflation data due on Wednesday
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices)
    By Jan Harvey
    LONDON, Feb 13 (Reuters) - Gold rose for a second day on
Tuesday as the dollar slipped in the face of a recovery in
global equities, which dampened appetite for the U.S. currency
as a safe store of value. 
    A retreat in the dollar, in which the precious metal is
priced, has helped gold to pull back nearly 2 percent from last
week's one-month low of $1,306.81 an ounce.
    Spot gold        was up 0.4 percent at $1,328.44 by 1245
GMT, while U.S. gold futures        for April delivery were
$4.30 an ounce higher at $1,330.70. 
    While bullion is sometimes seen as a haven from risk, it
benefited little last week from the slide in equities as
investors moving out of stocks broadly sought refuge in the
dollar, trumping other drivers.            
    "Gold is moving up when risk appetite is improving, and
that's happening because the dollar is weakening - otherwise
that should not happen," said ABN Amro analyst Georgette Boele. 
    Global equities                 were up 0.3 percent on
Tuesday, with Asian shares rising from two-year lows overnight
on the back of an extended rebound among Wall Street stocks
after their biggest weekly drop in two years.             
    Shares remained under some pressure in Europe, however,
indicating caution in the market. Investors are now awaiting
U.S. January inflation data, due on Wednesday, for clues on the
next move in financial markets.
    Inflation is sometimes seen as gold-positive, because
bullion is seen as a safe store of value at a time when price
pressures are rising, but expectations that the U.S. Federal
Reserve will lift interest rates to fight inflation make the
non-yielding metal less attractive.
    "Usually, if these readings are a bit higher than expected,
that triggers some expectations for higher rates, which should
support the dollar but will weigh on gold if you get yields
moving up," ABN Amro's Boele said. 
    Among other precious metals, silver        was up 0.5
percent at $16.63 an ounce, while platinum        gained 0.6
percent to $976.50.
    Palladium        was up 0.8 percent at $992.70. The
autocatalyst metal has slid nearly 14 percent since hitting a
record $1,138 in mid-January but remains at elevated levels on
expectations that the market will remain in deficit for a while
    "Over time, prices will provide the incentive to right
palladium's balance, driving substitution in autocatalysts and
industrial uses, as well as supporting the expansion of both
recycling and new production capacity," ICBC Standard Bank said
in a note. 
    "But these are multi-year processes and, in the meantime,
prices will need to incentivise the release of sufficient
inventory to plug an ongoing deficit."    

 (Additional reporting by Eileen Soreng in Bengaluru; Editing by
David Goodman)
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