Mubasher: Gold prices climbed earlier on Friday with the US dollar faltering after weaker than expected data on inflation in the US, which dimmed the case for a faster momentum of policy tightening by the US Federal Reserve.
At 6:43 am GMT, spot gold rose 0.5% to $1,206.10 per ounce, after tapping the highest level since 28 August at $1,212.65 per ounce in the previous session, while gold futures for December deliveries went up 0.3% to $1,211.30 per ounce.
By 9:41 am GMT, spot gold climbed 0.44% to $1,206.70 per ounce, while gold futures rose 0.28% to $1,211.60 per ounce.
US consumer prices went up below expectations in August, while underlying inflationary pressures also seemed to ease, indicating a potential slowdown in the pace of interest rate hikes.
“With the data falling short of expectations, investors are thinking that the Fed may not go for a rate hike in December, even though a hike in September is definite,” Shandong Gold Group chief analyst Ji Ming told Thomson Reuters, predicting that prices could rise in the weeks ahead.
The US dollar index, which traces the greenback against a basket of major peers, was 94.442, following a decline to the lowest level since 31 July at 94.427.
By 9:41 am GMT, the dollar index went down 0.06% to 94.4640.
While the trade row between the US and China has prompted investor appetite for the US dollar, the demand for the greenback retreated this week on reports that the US administration extended an invitation to Chinese officials to restart trade negotiations.
Beijing welcomed the invitation as now the world’s largest economies are now reported to be engaging in discussions of the details.
“The trade negotiation is a favour to the [gold] market with the dollar a little bit soft and some shorts being covered,” Hong Kong-based Wing Fung Precious Metals dealing head Peter Fung told Reuters.
Gold prices have fallen 12% from a record high in April, amid escalating global trade conflicts, and as Fed interest rate hikes weighed.