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Gold rises early Thursday on Fed rate hike pause hopes

Gold rises early Thursday on Fed rate hike pause hopes

Mubasher: Gold prices inched up earlier on Thursday as weak US inflation figures stoked expectations that the US Federal Reserve would put rate hikes on hold this year.

In addition, market participants anticipated developments in the trade negotiations between the US and China.

At 8:06 am GMT, spot gold rose 0.2% to $1,308.66 per ounce, while US gold futures fell 0.2% to $1,311.80 per ounce.

By 8:49 am GMT, spot gold stabilised at $1,306.22 per ounce, as gold futures declined 0.46% to $1,309.10 per ounce.

US consumer price inflation stalled last January for the third month in a row, resulting in the slightest annual gain in inflation in over one year and a half.

US inflation data could pave the way for the Fed to pause interest rate hikes for a while.

The US central bank held interest rates at their current level in late January, vowing a “patient” approach in rate changes owing to looming slowdown and uncertainty about trade issues.

Several Fed officials have signalled that they would back a pause in rate increases to evaluate the impact on the economy.

“If you look more broadly, the Fed is unlikely to raise rates in an environment where inflation is still low,” DailyFX senior currency strategist Ilya Spivak told Thomson Reuters.

The precious metal tapped a more than one-week peak of $1,318.12 per ounce on Wednesday, but later on gains were offset owing to the strength in the US dollar.

The greenback drew support from sustained strength in core inflation. In the 12-month period ended last January, the so-called core consumer price index (CPI) rose 2.2% for the third consecutive month.

By 8:22 am GMT, the US dollar index, a gauge for the greenback against six major peers, went up 0.08% to 97.2020.

Inflation figures gave a push for the dollar, Spivak said, adding that “intraday declines [in gold could be seen], but there is not enough juice for a downside breakout in gold.”

In addition, investor optimism about a breakthrough the trade deadlock between the US and China was raised after President Donald Trump said on Wednesday that the negotiations between the world’s biggest two economies were “going along very well.”