Gold futures tip higher after CPI report

New York (Sept 16)  Gold futures pushed higher in early trade Wednesday after a consumer-price report suggested that inflation might be short of the Federal Reserve’s target levels to support a rate hike. That may be good news for gold prices.

The Fed has been keenly watching employment and inflation as two key gauges to help influence its plans for kicking off the first interest-rate hike in nearly a decade. The tick down in inflation Wednesday may give some support to the camp that believes the so-called economic data-dependent central bank may hesitate to implement tighter monetary policy if it isn’t confident inflation is headed to its target 2% level.

The Federal Open Market Committee concludes its closely watched two-day meeting Thursday with a policy statement and news conference, which could see the central bank provide clues to the pace of interest-rate hikes—a move that has broad implications for a host of assets including dollar-denominated gold.

Ahead of the Fed confab, gold inched higher, gaining after inflation data showed a 0.1% fall in the consumer-price index in August. The fall was the first this year. Economists polled by MarketWatch had expected to see no change in CPI.

Gold futures for December delivery GCZ5, +1.22%  added $10.20, or 0.9%, to $1,112.90 an ounce Wednesday in early trade up from $1,109.50 an ounce before the CPI data were released Wednesday.

A slip in the dollar gauged by the U.S. dollar index DXY, -0.19% which measures the buck against a basket of six rival currencies, also helped support a leg higher in gold.

Dollar-denominated gold benefits from a weaker dollar, which makes the yellow metal more attractive to buyers in other currencies.

In other metals, December silver SIZ5, +3.41% jumped 41 cents, or 2.9%, to $14.74 an ounce.

Source: MarketWatch