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Title: Gold prices inch higher ahead of U.S. inflation data

Apr 12, 2022 02:51AM ET

By: AnalysisWatch

Gold prices rose on Tuesday as risk appetite diminished ahead of U.S. inflation data that could support the Federal Reserve's aggressive stance to curb rising price pressures.

At 02:21 AM ET, spot gold was 0.2% higher at $1,956.78 per ounce, having reached its highest level in nearly a month on Monday.U.S. gold futures contracts rose 0.6% to $1,960.30 an ounce.

Nicholas Frappell, global general manager at ABC Bullion, said gold is rising on weaker equities and geopolitical tensions while facing headwinds from weaker oil, a stronger dollar and rising real yields.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3% as investors braced for red-hot U.S. inflation data that was expected to show prices rose the most in more than 16 years last month.

"If the number is much lower, gold prices will fall," Frapell predicted.

A stronger dollar makes gold less attractive to holders of other currencies, while higher US interest rates and yields increase the opportunity cost of owning gold, which is also used as a hedge against inflationary pressures.

Palladium gained 0.9 percent to $2,453.83 on Monday after falling in London markets to its highest level since March 24 at $2,550.58.

"(Palladium) is in a choppy consolidation after the turnaround (on Monday). "Around $2,600 is the high and $2,150 is the low, and in between there are a number of moves back and forth," said Ilya Spivak, currency strategist at DailyFX.

"A lot of what happens next in terms of the actual development of the trend will depend on some indication that the negotiations have taken a step towards a substantive ceasefire," he said, referring to the Russia-Ukraine talks.

Among other precious metals, spot silver rose 0.3% to $25.16 an ounce and platinum strengthened 0.7% to $983.66.

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