Gold rebounded after US inflation data boosted the Reserve’s bets on raising interest rates

(Reuters) – Gold prices reversed course to gains on Wednesday as the dollar weakened after US inflation readings came out as expected, reinforcing expectations that the Federal Reserve will stop raising interest rates.

Dollar and US Treasury yields fell after the Labor Department reported that the Consumer Price Index (CPI) rose 0.4% last month, in line with estimates.

However, core inflation remained strong. In the 12 months through April, the CPI rose 4.9% after rising 5.0% year-on-year in March.

Spot gold rose 0.6% to $2,046.76 an ounce by 8:55 AM ET (1255 GMT), while US gold futures rose 0.6%, to $2,054.10.

“The gold bulls breathed a sigh of relief because the numbers haven’t been hotter and that’s why we’re seeing the market rally,” said Jim Wyckoff, senior analyst at Kitco Metals.

“He is in the camp of the monetary-policy doves who want to see the Fed stop raising interest rates sooner rather than later.”

The case for the US central bank to end its rate hike campaign got a bit stronger after the report.

While gold is considered a hedge against inflation, higher interest rates reduce the attractiveness of non-yielding bullion.

Some analysts said that gold may once again try to reach record highs, given persistent economic concerns, including US debt ceiling tensions.

Daniela Hathorn, senior market analyst at Capital, said that concerns about a possible US debt default are preventing investors from taking higher risks, and therefore gold remains well supported at this time to $1970, while resistance may appear around $2066 to $2076. com.

Elsewhere, spot silver rose 0.8% to $25.81 a troy ounce, while platinum added 1.7% to $1,122.79.

Palladium rose 2.6 percent to $1,611.32.

Reported by Ashitha Shivaprasad in Bengaluru; Edited by Rashmi Aish

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