Gold shines as investors evaluate chances of slowing US rate hikes

Gold prices rose on Thursday, as investors assessed the chances of the Federal Reserve slowing the pace of raising interest rates, while the rise of the dollar curbed the gains of the yellow metal.

And by 0252 GMT, gold in instant transactions increased 0.1 percent to $ 1906.01 an ounce. But US gold futures fell 0.1 percent to $1,906.00.

Some Fed officials signaled on Wednesday that they would support moving forward with rate hikes, while Philadelphia-based Fed President Patrick Harker and Dallas counterpart Lori Logan said they support a slower pace of monetary tightening.

Most traders expect a 25 basis point rate hike at the Federal Reserve meeting on January 31 and February 1. Last year, the US central bank slowed the pace of its increases to 50 basis points in December after four consecutive increases of 75 basis points.

Lower interest rates tend to enhance the attractiveness of gold because they reduce the opportunity cost of holding non-yielding metal.

But limiting gold’s gains, the dollar index rose by 0.1 percent. And the rise of the US currency makes gold priced in it more expensive for buyers abroad.

Data on Wednesday showed that producer prices in the United States fell more than expected in December, providing further evidence of easing inflation, while retail sales fell by the most in a year, putting consumer spending and the broader economy on a weaker growth path.

As for other precious metals, silver fell in spot transactions by 0.2 percent, to $ 23.38 an ounce. Platinum settled at $1,038.38, and palladium fell 0.1 percent to $1,716.13.