Gold climbs over 1% on softer dollar, yields ahead of US inflation data
By Sherin Sans
Oct 15 (Reuters) - Gold prices climbed more than 1% on Thursday as the dollar and US Treasury yields remained under pressure, while investors looked to fresh US inflation data for clues on whether the Federal Reserve will raise interest rates again this month.
Spot gold was up 1.2% to $4,156.11 per ounce by 0917 GMT. US gold futures for December delivery rose 1.7% to $4,177.80 per ounce.
The dollar .DXY slipped 0.5%, making greenback-priced bullion more affordable for holders of other currencies, while the benchmark 10-year Treasury yield also fell to a three week low. US/USD/
"Falling real yields and resilient investment demand help gold recover from its post-CPI selloff, but the technical outlook remains fragile," said Ole Hansen, head of commodity strategy at Saxo Bank.
US consumer prices accelerated in September on a surge in gasoline costs, with price pressures spreading beyond energy and raising concerns among economists that underlying inflation could be getting sticky.
Market participants are now awaiting Producer Price Index (PPI) and retail sales data due at 1230 GMT for further clues on inflation trends and the Federal Reserve's policy path.
"If the PPI comes in as expected, which is 5.4% year on year, then that pattern will be continued. So you would expect bond yields to rise again. We're just going to have to watch it very carefully," said Rhona O'Connell, head of market analysis at Stone X.
Traders are pricing in about a 29% chance of a rate hike later this month, compared with 22% before the data, according to CME's FedWatch Tool.
Gold is traditionally seen as a hedge against inflation, but higher interest rates make the non-yielding asset less attractive.
San Francisco Fed President Mary Daly said further rate increases would probably be needed, but signalled no need to act at the October meeting; Vice Chair for Supervision Michelle Bowman said there was time to wait.
Among other metals, spot silver gained 1.8% to $56.66 per ounce, platinum rose 0.3% to $1,611.76 per ounce and palladium climbed 2.9% to $1,125.37 per ounce.