Asian gold prices rose on Thursday, as signs of cooling US inflation heightened speculation that the Federal Reserve would soon pause its tightening policies. Spot gold in Asia rose by $3.73 or 0.18% to $2,033.82 per ounce.
Data released on Wednesday showed that the US Consumer Price Index (CPI) rose 4.9% year-on-year in April, the first time in two years that the annual growth rate has been below 5%. This pushed down 10-year Treasury yields, supporting expectations that the Federal Reserve will cut interest rates later this year.
Although lower rates tend to support gold prices, the hawkish comments from US policymakers seeking to control persistent price pressures have suppressed gains.
In addition, a weaker US dollar is also a positive factor for gold. The US dollar index, which tracks the exchange rates of the US dollar against a basket of six major currencies, fell 0.15% in Asia on Thursday, making gold priced in US dollars relatively cheaper for investors holding other currencies.
With bets on central bank easing and worries about an impending US debt ceiling crisis, the credibility of the US dollar may be threatened, which is why gold has been trading above $2,000 per ounce for most of this month.
