By Swati Verma
(Reuters) – Gold prices hit two-week highs on Thursday, as the U.S. dollar and Treasury yields stumbled on the Federal Reserve’s cautious approach on interest rates, while investors awaited a key inflation report for more clarity on future policy path.
Spot gold rose 0.2% to $1,877.67 per ounce by 0339 GMT, its highest level since Sept. 29. U.S. gold futures were up 0.2% at $1,890.80.
The dollar index and U.S. Treasury yields were rooted near two-week lows, making non-interest-paying gold more attractive.
Minutes of the Fed’s September meeting showed growing uncertainty around the path of the U.S. economy pushed policymakers into a newly cautious stance last month, a position reaffirmed by top Fed officials in a series of statements this week.
“We are almost at the end of interest rates hikes and there could probably be a last one of 25 basis points, which would not have a significant impact on the market because this is largely expected,” said Brian Lan, managing director at Singapore dealer GoldSilver Central.
“But one thing for sure is that people would be expecting interest rates will still continue to remain high … so precious metals price will remain (broadly) subdued.”
High interest rates raise the opportunity cost of holding non-yielding bullion, which is still down over 9% from near record highs hit in May. Investors still see a 26% chance of a rate hike at the Fed’s December meeting.
The consumer price index data, which is expected to show inflation moderated last month, is due later in the day and comes after data on Wednesday showed U.S. producer prices increased more than expected in September, but underlying inflation pressures at the factory gate continued to abate.
Elsewhere, spot silver firmed 0.1% to $22.09 per ounce, platinum advanced 0.5% to $889.70 and palladium gained 0.7% to $1,174.80.
(Reporting by Swati Verma in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich)
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