Gold ticks up as dollar softens after cooler US inflation data

Gold prices inched higher on Thursday, helped by a softer dollar as cooler-than-expected U.S. inflation data suggested that the Federal Reserve might pause raising rates after a possible hike in May.

FUNDAMENTALS

Spot gold was up 0.1% at $2,017.19 per ounce, as of 0105 GMT. U.S. gold futures rose 0.4% to $2,032.50.

The dollar index was 0.1% lower, making bullion cheaper for buyers holding other currencies.

Gold prices jumped more than 1% on Wednesday after data showed the U.S. Consumer Price Index rose 0.1% last month versus expectations of a 0.2% rise, after advancing 0.4% in February.

The CME FedWatch tool shows markets pricing in a 70.4% chance of a 25 basis-point hike in May but 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 Fed had “more work to do” on rate hikes, tighter credit conditions could argue for a pause.

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