Investing.com -- Gold ticked up on Tuesday remaining near one-week highs, as U.S. consumer prices showed little signs of building inflationary pressure last month, potentially delaying the timing of the Federal Reserve's next interest rate hike.
On the Comex division of the New York Mercantile Exchange, gold for June delivery wavered between $1,270.00 and $1,283.65 an ounce, before settling at $1,277.65, up 3.45 or 0.29%. With the slight gains on Tuesday, gold remains near 15-month highs from the beginning of May when it eclipsed $1,300 an ounce. Gold has now closed higher in four straight sessions and five of the last six. Since the start of the year, gold is up by more than 20% and is on pace for one of its strongest first halves in more than a decade.
Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,322.10, the high from August 8, 2014.
On Tuesday morning, the U.S. Department of Labor's Bureau of Labor Statistics (BLS) said its Consumer Price Index (CPI) rose by 0.4% in April, slightly above consensus forecasts of a 0.3% rise. Consumer prices accelerated last month after a modest 0.1% gain in March. A surge in gasoline prices by nearly 10% drove the gains, as April CPI rose by 1.1% on a yearly basis, up from 0.9% a month earlier. As a result the Core CPI Index, which strips out volatile food and energy prices, rose by 0.2% in line with consensus estimates. On an annual basis, the core index is up by 2.1% in comparison with its reading from April, 2015. It represents a slight decline from March when core prices increased by 2.2% on a yearly basis.
By comparison, the Core PCE Index inched down to 1.6% two months ago. The Core PCE Index, which also discounts food and energy prices, is the Fed's preferred gauge of inflation. As the Fed looks for signs that persistently sluggish inflation is firming, the reading has remained below its targeted goal of 2% in every month over the last three years.
The Federal Open Market Committee (FOMC) has left its benchmark Federal Funds Rate at a targeted range of 0.25-0.50% in each of its first three meetings this year. After implementing its first rate hike in seven years in mid-December, the FOMC said in a closely-watched forecast that it could raise short-term interest rates as much as four times this year. Since then, the FOMC has lowered its outlook to two, amid heightened volatility in global financial markets. Currently, there is a 7.5% chance the FOMC will raise rates by 25 basis points, according to the CME Group's (NASDAQ:CME) FedWatch tool, when it meets next on June 14-15. There is also a 37% chance the FOMC will wait until September before lifting rates, up from 28.8% last month.
Any rate hikes by the Fed this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell by more than 0.15% to an intraday low of 94.31. The index has crashed by more than 4% since early-December. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Elsewhere, metal traders reacted to reports that billionaire investor George Soros resumed his investment in gold during the first quarter, after refraining from the precious metal in the prior two quarters. Over the first three-months of the year, Soros Fund Management LLC bought 1.05 million shares in the SPRD Gold Trust, valued at $123.5 million, according to a 13F filing with the U.S. Securities and Exchange Commission. The fund also purchased approximately 19.4 million shares in Barrick Gold Corp. valued at $263.7 million.
Meanwhile, hedge fund Paulson & Co. reduced its stake in the gold-backed ETF over the quarter. At the end of the three-month period, the fund owned nearly 5 million shares worth $561.7 million, 13F filings showed.
Silver for July delivery gained 0.106 or 0.62% to $17.26 an ounce.
Copper for July delivery inched down 0.002 or 0.10% to $2.087 a pound.