Gold hits 1-month high as dollar dips after US PCE data

Gold hits 1-month high as dollar dips after US PCE data

Gold scaled a one-month high on Thursday as the dollar slipped after U.S. inflation data came in line with expectations, with traders' attention turning to further commentary from Federal Reserve officials for cues on interest rate cuts.

Spot gold was up 0.5% at $2,045.59 per ounce as of 12:59 p.m. ET (1759 GMT). U.S. gold futures gained 0.6% at $2,054.40.

Silver rose 1% to $22.67 per ounce, platinum was flat at $878.73, and palladium ticked 1.1% higher to $939.75.

"Gold bulls just needed an excuse to buy, and they found it," with the data only on consensus after recent strong inflation readings, said Tai Wong, a New York-based independent metals analyst, adding gold could face technical resistance around $2,065.

Data showed the U.S. personal consumption expenditures price index rose by 0.3% in January, while the core PCE price index gained 0.4%, pressuring the dollar, which makes gold cheaper for investors holding other currencies. [USD/] [US/]

"However, the Fed's preferred gauge of inflation running at 0.4% for the month won't bring a rate cut any closer than June," Wong added.

Although gold is traditionally considered an inflation hedge, higher interest rates to rein in the elevated prices discourage investment in bullion since it pays no interest.

Markets are currently pricing in a 62% chance of a Fed rate cut in June, the CME FedWatch Tool showed.

Earlier this week Fed officials said the door is opening for rate cuts, which could likely arrive later this year.

"The steady stream of Fed speak has noted that there's no rush in lowering rates and that news is priced into the market," said David Meger, director of metals trading at High Ridge Futures.

"If there is a potential change that would allude to the idea of lowering interest rates even a smidgen sooner, it will be positive for gold."