Gold ticks up as dollar softens after cooler US inflation data

Gold prices inched higher on Thursday, helped by a softer dollar as cooler-than-expected U.S. inflation data suggested that the Federal Reserve might pause raising rates after a possible hike in May.

FUNDAMENTALS

* Spot gold was up 0.1% at $2,017.19 per ounce, as of 0105 GMT. U.S. gold futures rose 0.4% to $2,032.50.

* The dollar index was 0.1% lower, making bullion cheaper for buyers holding other currencies.

* Gold prices jumped more than 1% on Wednesday after data showed the U.S. Consumer Price Index rose 0.1% last month versus expectations of a 0.2% rise, after advancing 0.4% in February.

* The CME FedWatch tool shows markets pricing in a 70.4% chance of a 25 basis-point hike in May but with rate cuts seen in the back half of the year.

* Gold is considered an inflation hedge, but rising interest rates reduce the appeal of non-yielding bullion. * San Francisco Fed Bank President Mary Daly said on Wednesday while the Fed had “more work to do” on rate hikes, tighter credit conditions could argue for a pause.

* Richmond Fed President Thomas Barkin said the Fed had more work to do in bringing inflation down to its 2% target because the latest data on price pressures was not sufficiently weak.

* Minutes from the Fed’s March meeting showed several policymakers considered pausing rate increases after a forecast from Fed staff that banking sector stress would tip the economy into recession, but concluded that high inflation remained the priority.

* Spot silver was up 0.1% at $25.51 per ounce, platinum added 0.2% at $1,017.30 and palladium rose 0.5% to $1,466.82.