Gold pares advance as U.S. inflation pickup stokes rate concerns
By Bloomberg
Gold futures pared advances after gains for U.S. inflation boosted concern that the economy is doing well enough for the Federal Reserve to start lifting interest rates.
The cost of living excluding food and fuel rose at a faster pace than expected in April, Labor Department data showed Friday. Fed policy makers have indicated they are watching inflation and the job market to help determine when to start tightening. The dollar rebounded against a basket of 10 currencies after the report on consumer prices.
“The inflation data brings the Fed a touch closer to its target,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York, said in a telephone interview. “The dollar strengthened after the data and gold came under pressure.”
On the Comex, gold futures rose 0.1 percent to $1,205.70 an ounce at 8:50 a.m., after climbing as much 0.9 percent.
Higher rates drive investors to favor assets that pay interest, including new bonds, curbing the appeal of gold, which generally offers returns only through price gains.
Traders will also be watching for comments by Fed Chair Janet Yellen, who’s scheduled to speak on the economy at 1 p.m. in Providence, Rhode Island.
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