Melbourne - Gold declined from the highest price in more than two weeks after inflation showed signs of stirring in the world’s biggest economy, boosting prospects for an increase in US interest rates. Silver dropped.
Bullion for immediate delivery fell as much as 0.4 percent to $1,188.55 an ounce and was at $1,190.78 at 11:07 a.m. in Singapore, according to Bloomberg generic pricing. The precious metal climbed to $1,195.15 on Tuesday, the highest level since March 6, as prices advanced for a fifth straight day.
While some investors buy gold as an inflation hedge, a pickup in the pace of consumer prices may boost prospects for higher borrowing costs, benefiting the US currency and hurting bullion. The Federal Reserve said last week it wants to be reasonably confident inflation is rising toward its 2 percent goal before tightening. The consumer-price index posted the first gain in four months in February, data showed on Tuesday.
“The slightly higher-than-expected February US CPI ensured a continued debate over the timing of any calendar 2015 increase in the Fed funds rate,” Patersons Securities Ltd said in an emailed note.
The CPI rose 0.2 percent last month, the Labour Department report showed. Core costs, which exclude food and energy, also gained 0.2 percent, exceeding the median forecast of economists surveyed by Bloomberg. The Bloomberg Dollar Spot Index climbed 0.2 percent on Tuesday, snapping two days of declines.
Chair Janet Yellen signaled last week that the Fed is in no hurry to raise rates after the central bank dropped a pledge to be patient. Vice-Chairman Stanley Fischer said on Monday that while higher rates will probably be warranted before the end of the year, it won’t be a smooth upward path.
Gold for April delivery was at $1,190.60 an ounce on the Comex from $1,191.40 on Tuesday, when prices capped a fifth day of gains in the longest run since the period to January 20.
Silver for immediate delivery fell 0.2 percent to $16.933 an ounce. Spot platinum lost 0.2 percent to $1,139.88 an ounce, while palladium added 0.1 percent to $764.55 an ounce.
Bloomberg