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Gold Prices Turn Lower After Strong U.S. Inflation Report

2018-02-14 23:00    Investing

Gold Prices Turn Lower After Strong U.S. Inflation Report Commodity News

© Reuters. Gold prices erase gains as U.S. dollar strengthens

Gold prices turned lower on Wednesday, as the release of strong U.S. inflation data sent the greenback broadly higher.

Comex gold futures were down 0.50% at $1,323.6 a troy ounce by 08:40 a.m. ET (12:40 GMT), off a one-week high of $1,339.4 hit earlier in the day.

The U.S. Commerce Department said consumer prices rose more than expected in January by 0.5%. Year-over-year, consumer prices increased 2.1% last month a year earlier, beating expectations for a gain of 1.9%.

Rising inflation would be a catalyst to push the Federal Reserve toward raising interest rates at a faster pace than currently expected.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.40% at 89.96, off a one-week trough of 89.28 hit overnight.

Gold is sensitive to moves in both U.S. rates and the dollar. A stronger dollar makes gold more expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.

Also Wednesday, the U.S. Commerce Department said retail sales fell 0.3% in January, disappointing expectations for a 0.2% rise.

Core retail sales, which exclude automobile sales, were unchanged last month, compared to expectations for a 0.5% rise.

Elsewhere on the Comex, silver futures were down 0.77% at $16.38 a troy ounce.

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