© Reuters. FILE PHOTO: Employees process ingots of 99.99 percent pure gold at the Krastsvetmet non-ferrous metals plant, one of the world’s largest producers in the precious metals industry, in the Siberian city of Krasnoyarsk, Russia November 22, 2018. REUTERS
By Asha Sistla
(Reuters) – Gold advanced more than 1% on Tuesday as Treasury yields eased after U.S. inflation data drove expectations that the Federal Reserve may not need to be as aggressive in tightening policy in the longer term.
XAU= rose 1% to $1,972.76 per ounce by 11:33 a.m. ET (1532 GMT), hitting its highest in nearly a month. U.S. GCv1 rose 1.5% to $1,977.70.
The benchmark 10-year U.S. yield slipped after inflation data showed an acceleration in March, but less than many market participants had expected. USD/ US/ (Full Story)
“The report provides some optimism that inflation could be peaking here. … That might help the Fed be a little bit less aggressive and tightening policy down the road,” said Edward Moya, senior market analyst with OANDA.
But Moya added that “this doesn’t change anything over the short term,” with the Fed still expected to raise interest rates by a hefty 50 basis points next month to tame inflation.
While gold is considered a safe haven as consumer prices rise, higher interest rates increase the opportunity cost of holding zero-yield bullion.
But the likelihood of aggressive policy measures has also sparked concerns the Fed may make a policy error and cause a recession, in turn bolstering safe-haven gold, analysts said. .N
Gold continued to find support from developments surrounding Ukraine, with Russian troops massing for a new offensive. (Full Story) (Full Story)
Palladium fell 2% to $2,383.23 per ounce on profit-taking, after hitting its highest since March 24 at $2,550.58 on Monday following the suspension of trading of the metal sourced from key producer Russia in the London hub.
Platinum inched 0.2% lower to $979.09. (Full Story)
The suspension of the Russian refiners could exacerbate near-term palladium supply tightness, Standard Chartered (OTC:) analysts said in a note, predicting volatile prices in the coming weeks.
Spot silver rose 1.9% to $25.55 per ounce.