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Gold prices rose on Tuesday as the dollar weakened as investors awaited US inflation data that could determine the next steps for the Federal Reserve’s monetary policy.
Spot gold rose 0.5 percent to $1,861.93 an ounce by 0645 GMT, after falling to its lowest since early January in the previous session. US gold futures rose 0.4 percent to $1,870.60.
Gold is highly sensitive to rising interest rates because that increases the opportunity cost of holding that non-yielding asset.
Investors are eagerly awaiting US consumer price data for January, due later in the day. Economists polled by Reuters had expected the core consumer price index to rise 0.5 month on month.
Wong added that if the consumer price index came out lower than expected, the Federal Reserve may bear the slowdown in raising interest rates, “which may mean the resumption of the dollar’s decline and the recovery of gold.”
Financial markets expect the target interest rate for the Federal Reserve to peak at 5.188 percent in July, versus the current range of 4.5-4.75 percent.
The dollar index fell 0.2 percent, making gold priced in the US currency less expensive for buyers who hold other currencies.
As for other precious metals, silver remained unchanged in spot transactions at $21.97 an ounce, and platinum rose 0.1 percent to $954.76, while palladium rose 0.2 percent to $1,569.07.
