Home Stock Gold prices rose as US inflation reported higher than expected

Gold prices rose as US inflation reported higher than expected


Gold futures rose higher on Tuesday after data showed US consumer prices in March rose for the fourth consecutive month and inflation rates reached their highest level in 2 and a half years. Bullion is often seen as a hedge against inflation.

Gold June
GC00,
+ 0.55%

GCM21,
+ 0.55%

up $ 7.10, or 0.4%, at $ 1,739.70 / ounce, after the precious metal hit its lowest end for a most active contract since April 5, data FactSet shows.

Consumer price index up 0.6% in March, the government said Tuesday, led by rising oil prices. Economists polled by Dow Jones and The Wall Street Journal have forecast the CPI to rise 0.5%. The 12-month inflation rate rose from 1.7% to 2.6% in March.

Fawad Razaqzada, market analyst at ThinkMarkets, writes: “Inflation is likely to continue to rise and the numbers over the next few months could be unusually large due to the underlying effects from the 2020 lockdown. data deviation ”. an unusually high or low level during the previous year period.

“The Fed expects inflation to subside after a temporary acceleration. However, the main risk is if their assumptions go wrong and the price pressure stays high. In fact, with consumer inflation expectations rising, this could lead to real price increases, ”he said.

The move towards gold in the session so far has also occurred as bond yields, which compete with gold for shelter demand, have been little changed after inflation data.

Treasury bonds with 10-year term
TMUBMUSD10Y,
1,666%

fell 0.5 basis points to about 1.67% after the CPI. Rising bond yields make gold less attractive to investors because precious metals do not provide coupons.

Meanwhile, silver may
SIK21,
+ 2.00%

SI00,
+ 2.00%

down another 35 cents, or 1.4%, to $ 25.22 / ounce, after a 1.8% drop the day before.

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