PRECIOUS-Gold ticks up as US inflation data fuels bets for rate-hike pause

*

Gold advances for third consecutive session

*

Markets pricing in 25-bp rate hike in May

(Recasts, adds comments and details, updates prices)

By Kavya Guduru

April 13 (Reuters) – Gold prices inched higher for a
third consecutive session on Thursday, as cooler-than-expected
U.S. inflation data spurred bets that the Federal Reserve might
raise rates once more next month before pausing hikes.

Spot gold was up 0.1% at $2,016.99 per ounce, as of
0332 GMT. U.S. gold futures rose 0.3% to $2,030.70.

Gold prices rose more than 1% on Wednesday after data showed
the U.S. Consumer Price Index (CPI) rose 0.1% last month,
compared with expectations for a 0.2% increase, after advancing
0.4% in February.

“Expectations that the Fed’s hiking cycle may be nearing its
end are well-anchored by the recent U.S. CPI data, with lower
Treasury yields and a weaker dollar being supportive of gold
prices,” said Yeap Jun Rong, a market analyst at IG. [US/]
[USD/]

The CME FedWatch tool shows markets are pricing in a 68.7%
chance of a 25 basis-point hike in May, with rate cuts seen in
the back half of the year.

Gold is considered an inflation hedge, but rising interest
rates reduce the appeal of non-yielding bullion.

San Francisco Fed Bank President Mary Daly said on Wednesday
while the U.S. central bank had “more work to do” on rate hikes,
tighter credit conditions could argue for a pause. Richmond Fed
President Thomas Barkin said the Fed had more work to do in
bringing inflation down to its 2% target because the latest data
on price pressures was not sufficiently weak.

Minutes from the Fed’s March meeting also showed several
policymakers considered pausing rate increases after a forecast
that banking sector stress would tip the economy into recession,
but concluded that high inflation remained the priority.

Recession concerns are “allowing gold prices to ride on its
safe-haven status… while technical conditions are revealing
some moderation in upward momentum on recent highs,” IG’s Yeap
added.

Spot silver was up 0.1% at $25.50 per ounce, platinum
was flat at $1,015.06 and palladium rose 0.3% to
$1,464.16.

(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu
Sahu)
((Kavya.Guduru@thomsonreuters.com;))

Keywords: GLOBAL PRECIOUS/ (UPDATE 1)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.