By Seher Dareen
(Reuters) – Gold prices pared gains after earlier jumping more than 1% to above the key $1,900 per ounce pivot on Thursday after data showing signs of cooling inflation in the United States boosted bets for slower rate-hikes from the Federal Reserve ahead.
U.S consumer prices unexpectedly fell for the first time in more than 2-1/2 years in December amid declining prices for gasoline and other goods, suggesting that inflation was now on a sustained downward trend.
Spot gold rose 0.5% to $1,886.19 per ounce by 9:47 a.m. ET (1447 GMT), earlier hitting $1,901.4, its highest since May 2022.
U.S. gold futures gained 0.6% to $1,889.50.
“The expectations clearly look like at this point, we’re going to see two more 25 basis point rate hikes at the next two Fed meetings,” said David Meger, director of metals trading at High Ridge Futures.
“We continue to focus on the idea that the Fed is getting that much closer to the end of their interest rate hike cycle … the underlying environment for gold remains strong.”
Money market participants see a 89.6% chance the Fed will raise the benchmark rate by 25 basis points in February.
Following the CPI report, the dollar dropped 0.5% to its lowest since early June, making gold more attractive for other currency holders. [USD/]
Fed Bank of Philadelphia leader Patrick Harker said the end stage for the central bank’s rate rise campaign is in sight.
While a separate report from the Labour Department showed initial claims for state unemployment benefits fell last week, signs of inflation decreasing took precedence.
Elsewhere, silver rose 1.4% to $23.74 per ounce, rising 3% earlier.
Platinum dropped 1.1% to $1,059.04 while palladium was down 1.2% at $1,752.18.
(Reporting by Seher Dareen in Bengaluru; editing by David Evans)
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