Gold declined and silver dropped on Wednesday after
inflation data showed the world’s biggest economy keeps growing, driving prospects for an increase in US interest rates.
Bullion for immediate delivery dropped as much as 0.4 percent to
$1,188.55 an ounce and was at $1,190.78 at 11:07 a.m. in Singapore,
according to Bloomberg generic pricing.
On Tuesday, the yellow metal climbed to $1,195.15, the highest level since March 6, as prices advanced for a fifth straight day.
While some investors buy gold as an inflation hedge, a pickup in the
pace of consumer prices may boost prospects for higher borrowing costs,
benefiting the dollar and hurting the gold.
Last week the Federal Reserve said it wants to be reasonably confident inflation is rising
toward its 2 percent goal before tightening.
Yesterday, the consumer-price index posted the first gain in four months in February.
The CPI rose 0.2 percent in February, according to the Labour Department report. Core costs, which exclude food and energy, also gained 0.2 percent, exceeding the median forecast of economists surveyed by Bloomberg. The Bloomberg Dollar Spot Index climbed 0.2 percent on Tuesday, snapping two days of declines.
Last week Chair Janet Yellen signaled last week that the Fed is in no hurry to raise rates after the central bank dropped a pledge to be patient. Vice-Chairman Stanley Fischer said on Monday that while higher rates will probably be warranted before the end of the year, it won’t be a smooth upward path.
Gold for April delivery was at $1,190.60 an ounce on the Comex from $1,191.40 on Tuesday, when prices capped a fifth day of gains in the longest run since the period to January 20.
Silver for immediate delivery dropped 0.2 percent to $16.933 an ounce.
Spot platinum lost 0.2 percent to $1,139.88 an ounce, while palladium added 0.1 percent to $764.55 an ounce.
