Gold futures made modest moves in either direction on Wednesday, as a stable U.S. dollar and a pick up in yields for sovereign debt, one of the most influential headwinds for bullion, ticked higher.
A report on U.S. consumer prices also 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 expects 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 rose by a dime to $1,716.90 an ounce, following a 2.3% rise on Tuesday, which marked the biggest one-day dollar and percentage rise for a most-active contract since Jan. 4, FactSet data showed. Prices on Monday had tumbled 1.2% to hit the lowest for the most-active contract since April 3.
“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.
Meanwhile, May silver shed 4.8 cents, or 0.3%, to trade around $26.135 an ounce, after jumping 3.6% in the previous session.
The dollar was holding steady, trading down less than 0.1%, as gauged by the ICE U.S. Dollar Index while the 10-year Treasury note yield was up at 1.55%.
Among other metals traded on Comex, May copper tacked on 0.7% to $4.036 a pound. April platinum shed 0.5% to $1,181.70 an ounce, while June palladium traded at $2,281 an ounce, down 0.5%.