Spot gold rose 0.4% to $4,418.87 an ounce at 02:40 ET (06:40 GMT). Gold futures also rose 0.03% to $4,461.82 an ounce. Gold prices moved higher on Thursday as investors waited for new US inflation data.
The US dollar also fell slightly, helping gold prices stay near $4,400. The US Dollar Index fell to 98.74. US 10-year Treasury yields rose after the government announced a plan to purchase up to $6 billion of longer-dated debt. Gold is holding close to $4,400 as traders wait for the PPI and CPI reports.
Gold prices rose even as US Treasury yields stayed high. Higher US Treasury yields are one factor limiting gold’s gains. Since gold does not generate interest income, its opportunity cost increases when bond yields rise. US inflation data is now the biggest near-term focus for gold traders. The Consumer Price Index (CPI) is scheduled for Friday. The data could also change expectations for what the Federal Reserve will do with interest rates at its next meeting. The key question for gold now is whether inflation will change Fed expectations. A weaker dollar and strong investment demand are supporting the metal. Higher Treasury yields, elevated oil prices and uncertainty over Fed policy are creating pressure. The upcoming US inflation data could determine which of these forces has the biggest impact on gold in the near term.
Because it could affect the Federal Reserve’s next interest-rate decision, investors are watching the inflation data. Because gold is priced in US dollars, a weaker dollar usually helps gold. Because gold does not pay interest, higher bond yields can make gold less attractive. Because investors can earn higher returns from interest-paying assets, rising Treasury yields can put pressure on gold.
The US Producer Price Index (PPI) is due on Thursday.
