February 14, 2018 / 10:51 AM / 3 months ago

PRECIOUS-Gold edges up ahead of U.S. inflation data

    * Dollar steadies ahead of U.S. inflation report
    * Numbers watched for impact on U.S. monetary policy
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices)
    By Jan Harvey
    LONDON, Feb 14 (Reuters) - Gold rose for a third day on
Wednesday ahead of U.S. inflation data due later in the day,
which investors are awaiting for clues on the outlook for U.S.
monetary policy. 
    The metal firmed in early trade as the dollar slid to a
15-month low against the yen, boosting interest in assets priced
in the U.S. currency, and managed to maintain those gains even
as the greenback steadied.
    Spot gold        was up 0.2 percent at $1,331.74 an ounce at
1240 GMT, while U.S. gold futures        for April delivery were
up $3.70 an ounce at $1,334.10.
    The U.S. inflation report for January, due for release at
1330 GMT, could raise expectations for faster U.S. interest rate
hikes if it indicates price pressures are building.            
    "U.S. monetary policy is still the main driver for the
yellow metal," ActivTrades' chief analyst Carlo Alberto De Casa
said. "Any jump in U.S. inflation could generate selling on
gold, as investors will probably see further raises on the
horizon."
    While inflation can boost demand for bullion as a safe store
of value, the positive impact of that may be offset by a rise in
interest rates, which makes non-yielding gold less attractive.
    European stocks rose ahead of the report, while the dollar
steadied against a basket of currencies after earlier losses. 
    Gold fell last week as investors selling out of sliding
stock markets opted for the dollar as an alternative investment.
The U.S. unit has since given up two-thirds of its gains for the
month.
    The world's largest gold-backed exchange-traded fund, SPDR
Gold Shares      , reported an inflow of nearly 3 tonnes on
Tuesday, following the biggest weekly fall in its holdings since
July 30.          
    On the physical side of the market, gold demand in major
consumer China was weak in the run-up to the New Year holiday
that will begin on Thursday, dealers said. 
    "Today marks the final day before China takes a week-long
holiday for their Lunar New Year celebrations," MKS said in a
note. "Volumes were again lower than the previous day." The
premium for gold in Shanghai over the spot price fell to $6 an
ounce on Tuesday, it said, from $8-9 at the end of last week.
    Among other precious metals, silver        was up 0.3
percent at $16.60 an ounce, while palladium        was up 0.1
percent at $987.80 an ounce. Platinum        was 0.4 percent
higher at $977.20 an ounce. 

 (Additional reporting by Eileen Soreng in Bengaluru, editing by
David Evans and Jane Merriman)
  
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