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Gold Prices Hit Two-Week Highs as Data Supports Fed Pause

Published 02/15/2019, 10:50 AM
- - Gold prices moved higher on Friday as a string of weak economic data and subdued inflation supported the Federal Reserve’s current stance of being “patient” with future rate hikes, lowering the opportunity cost of holding non-yielding bullion.

At 10:47 AM ET (15:47 GMT), gold futures for April delivery on the Comex division of the New York Mercantile Exchange gained $4.35, or 0.33%, to $1,318.25 a troy ounce. The intraday high of $1,322.95 was its best level since Feb. 4.

Coming on the back of the biggest decline in U.S. retail sales in the last nine years, a string of weak data out Friday reinforced the idea that the economy lacks the firepower necessary to force the Federal Reserve to boost interest rates.

Overnight, Chinese inflation data increased concern over deflationary pressures in the world’s second largest economy. China’s consumer price inflation unexpectedly slowed, while factory-gate inflation hit its weakest level since September 2016.

Stateside, U.S. import prices fell for a third-straight month in January, leading to the largest annual drop in nearly 2-1/2 years. That only added to earlier evidence this week that the consumer price index was holding steady, downplaying the need for tighter Fed policy so inflation doesn’t get out of hand.

The University of Michigan’s preliminary February readings of consumer sentiment released on Friday showed a larger-than-expected improvement following the reopening of the government after a shutdown that had dragged confidence to a two-year low.

As part of the data collected, the surveyor’s chief economist Richard Curtin noted that consumers’ long-term inflation expectations fell to the lowest level recorded in the past half century.

“The data suggest that the Fed will find it even harder to justify another rate hike given the record low inflation expectations,” Curtin added.

In other metals trading, silver futures rose 0.32% at $15.578 a troy ounce by 10:48 AM ET (15:48 GMT).

Palladium futures gained 1.56% to $1,407.50 an ounce, while sister metal platinum traded up 0.42% at $792.50.

In base metals, copper advanced 0.32% to $2.783 a pound.

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