Gold Hits Two-Week High on Dollar Weakness, US Inflation Fears

Gold Hits Two-Week High on Dollar Weakness, US Inflation Fears

The gold prices hit a two-week high Thursday, buoyed by the dollar weakness and a datum of inflation in the United States which raised the appetite for bullion.

The consumer prices of U.S rose sharply in January which caused the biggest annual increase in inflation in 40 yearswhich could encourage speculation in financial markets about a 50 basis point interest rate hike next month, when the monetary policy makers of the fed.

At 17:01 GMT, spot gold was up 0.5% at $1,841.57 per ounce. US gold futures gained 0.2% to $1,840.90.

The robust inflation reading increased gold’s appeal as a hedge, but interest rate hikes would raise the opportunity cost of holding non-interest bearing bullion.

The dollar fell 0.3% to a floor in almost a week, making gold cheaper for investors holding other currencies.

U.S. federal funds rate futures on Thursday raised the chances of a half-percentage-point upward adjustment by the Federal Reserve at next month’s meeting, after data from consumer prices higher than expected in January.

In other precious metals, spot silver was up 1.6% at $23.68 an ounce; platinum gained 1.9% to $1,053.45; and palladium added 1.4% to $2,310.79.

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