Gold moves higher as yields, dollar slip after U.S. inflation data

(Reuters) – Gold prices gained on Tuesday as the dollar and Treasury yields retreated after softer-than-expected U.S. consumer inflation data, which fuelled more bets that the Federal Reserve may be done hiking interest rates.

Spot gold was up 0.6% at $1,957.70 per ounce, as of 9:14 a.m. ET (1414 GMT). U.S. gold futures rose 0.7% to $1,963.00.

U.S. consumer prices were unchanged in October and underlying inflation showed signs of slowing. In the 12 months through October, the CPI climbed 3.2% after rising 3.7% in September.

The market is pricing in a 100% chance that the U.S. central bank will leave rates unchanged in December versus 86% before the inflation report, according to the CME FedWatch tool.

“CPI data came in significantly weaker than expected, which is quite supportive for precious metals. We are expecting a significant deterioration in the data over the course of the fourth quarter, which should weaken dollar and support gold,” said Daniel Ghali, commodity strategist at TD Securities.

“Over the next six months, we’re looking at gold prices to rally towards $2,100 per ounce.”

Boosting bullion’s appeal, the dollar index fell 1% while benchmark 10-year U.S. Treasury yields hit a more than one-month low after the data.

Investors will also keep a tab on the U.S. producer price index data due on Wednesday. Spot silver rose 2.3% to 22.81 per ounce.

Commerzbank lowered its price forecast for silver at the end of 2024 to $29 per ounce from $30.

But, it added that this would still see silver noticeably outperform gold, attributing it to a positive outlook for industrial demand and ongoing transformation of the economy towards climate neutrality, in which silver plays an important role.

Platinum gained 1.4% to $876.39, and palladium climbed 1.8% to $998.86.