Gold futures logged a modest advance on Wednesday, as a stable U.S. dollar and retreat in yields for sovereign debt helped provide a runway higher for bullion.
A report on U.S. consumer prices appeared to momentarily weigh on precious metals, with assets perceived as risky gaining some buoyancy following the release of the inflation data.
The U.S. CPI data for February showed inflation rising modestly, in line with expectations. Inflation rose 0.4% for the month, but with food and energy stripped out, the gain was 0.1%. Headline CPI picked up to 1.7% from 1.4% on an annual basis while the core 12-month increase dipped to 1.3% from 1.4%.
Naeem Aslam, chief market analyst at AvaTrade, said the data was “somewhat underwhelming.”
He said gold was “massively oversold” and expected prices to move up from here, but investors “need to keep an eye on the 10- and 30-year Treasury yields. “If the yield begins to soar again, a likely scenario, we could see the influence of that on gold prices.”
April gold on Comex GC00,
Wednesday’s second straight gain for the yellow metal represents its longest string of advances since a three-session climb ended Feb. 22, FactSet data show.
“It would be a bit premature to call the bottom in gold here,” analysts at Sevens Report Research wrote in Wednesday’s newsletter. However, prices did “come near the low end of an important technical support level and the bond market is showing signs of stabilizing.”
“We will be watching gold closely in the days ahead to look for further evidence of a bottom,” they said.
Commodity dealers were also keeping one eye on fiscal spending after the House passed a $1.9 trillion coronavirus relief bill and sent it to President Biden for his signature. Fiscal spending plans, like the COVID aid package, have long been expected to give a boost to gold as it weighs on the U.S. dollar.
Among other metals traded on Comex, May copper HGK21,