May 8 (Reuters) – Gold prices on Monday hit a weaker dollar and heightened economic risks as investors prepare for U.S. inflation data to gauge the direction of Federal Reserve policy. rose.
The gold spot gained 0.3% to $2,022.76 per ounce by 0915 GMT. US gold futures rose 0.3% to $2,029.80.
The Dollar Index fell 0.1%, making bullion more attractive to foreign buyers.
“Gold remains supported as the market is wary of further US financial turmoil, which will only amplify the risk of a US recession. It could give another foothold to safe haven assets,” said Han Tan, Chief Market Analyst at Exinity.
Tan added that investors and traders still believed the Fed would eventually cut rates later this year in favor of zero-yielding gold.
Concerns have surrounded the banking sector since the collapse of US-based Silicon Valley Bank fueled a flight to safe haven assets and helped gold record a monthly gain in April.
Aside from Wednesday’s US Consumer Price Index (CPI) data, traders are also keeping an eye on developments surrounding the country’s banking sector and debt ceiling.
Inflation this week also follows data that showed US job growth accelerated in April. This also supported bets that the Fed could have been forced to hold rates on hold for longer, causing a sharp drop in gold on Friday.
“If U.S. inflation rises, the Fed will need to reassess its strategy, prompting a dollar rally and a gold reversal,” said Jigar Trivedi, an analyst at Mumbai-based Reliance Securities. It’s possible,” he said.
Spot silver fell 0.2% to $25.61 an ounce and platinum rose 1% to $1,069.51 an ounce.
Palladium gained 2% to $1,520.63.
Reported by Ashitha Shivaprasad, Bangalore.Edited by Sherry Jacob Phillips
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