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Gold prices edged higher on Friday as softer-than-expected US consumer prices data dimmed the case for a faster pace of policy tightening by the Federal Reserve.
Fundamentals
Spot gold was up 0.2 per cent at $1,203.55 an ounce as of 0108 GMT. The bullion had hit its highest since August 28 at $1,212.65 on Thursday before reversing its course to close 0.4 per cent lower. It has gained 0.7 per cent so far this week, heading for its first weekly gain in three. US gold futures were mostly steady at $1,208.50 an ounce.
US consumer prices rose less than expected in August as increases in gasoline and rents were offset by declines in healthcare and apparel costs, and underlying inflation pressures also appeared to be slowing. The CPI data came after soft US wholesale price data. The US central bank is widely expected to raise benchmark interest rates at its September meeting.
Higher rates make gold less attractive since it does not pay interest and costs to store and insure.
In trade talks, Chinese officials have welcomed an invitation from Washington for new round of talks. But U.S. President Donald Trump tempered market expectations, tweeting on Thursday that the United States is “under no pressure to make a deal with China’’.
The Trump administration is readying a final list of $200 billion in Chinese imports on which it plans to levy tariffs in the coming days. The months-long trade rift between Washington and Beijing has prompted investors to buy the US dollar in the belief that the United States has less to lose from the dispute. This has driven investors towards record short positions in Comex gold and heavy liquidations in gold exchange-traded funds.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.36 per cent to 742.53 tonnes on Thursday from Wednesday. South African miner Gold Fields Ltd aims to extend the life of its Cerro Corona gold mine in Peru through 2040 with an investment of at least $240 million, the company's vice president for the Americas had said late on Wednesday.
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