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Gold climbs above $1,100 after soft U.S. inflation data

CommoditiesJan 20, 2016 08:56AM ET
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© Reuters. Gold climbs above $1,100 - Gold futures rallied to a more than one-week high in North America trade on Wednesday, after U.S. consumer prices fell again in December, fanning hopes that the Federal Reserve could delay raising interest rates to the second half of this year.

Gold for February delivery on the Comex division of the New York Mercantile Exchange jumped to a session high of $1,103.20 a troy ounce, the most since January 11, before trading at $1,102.20 by 13:50GMT, or 8:50AM ET, up $13.10, or 1.2%.

The U.S. Commerce Department said that consumer prices fell 0.1% from a month earlier in December, compared to expectations for a flat reading. Year-over-year, consumer prices were 0.7% higher from the same month a year earlier, below expectations for a 0.8% increase.

Consumer prices, excluding food and energy costs, inched up 0.1%, missing forecasts for a gain of 0.2%.

A separate report showed that housing starts fell 2.5% to 1.149 million units last month from November’s total of 1.179 million units. Analysts had expected a rise 1.6% to 1.200 million. The number of building permits issued declined 3.9% to 1.232 million units. Economists had forecast a drop of 6.4% to 1.200 million units.

The downbeat data could persuade the Federal Reserve to delay its next interest rate hike beyond the first quarter. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.

Meanwhile, gold received a further boost as retreating oil prices, a weaker dollar and losses in global equity markets underpinned demand for assets perceived as safer.

The precious metal is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.

Also on the Comex, silver futures for March delivery dipped 1.6 cents, or 0.11%, to trade at $14.10 a troy ounce during morning hours in New York.

Elsewhere in metals trading, copper prices declined as worries over global economic growth continued to weigh.

The red metal is down nearly 8% so far this year as investors slashed copper holdings amid persistent worries over an economic slowdown in China. The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.

Gold climbs above $1,100 after soft U.S. inflation data

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