LONDON: Gold jumped 1 per cent on Wednesday, rebounding from losses made in the wake of stronger than expected US inflation data, as the dollar surrendered gains and stock markets swung higher.

The dollar initially rose after Wednesday’s inflation report showed US consumer prices rose more than expected in January, as traders bet that rising price pressures could spur the Federal Reserve to boost interest rates faster than previously forecast.

However, softer than forecast retail sales data and an immediate pullback in equities markets sparked concern that the Fed would struggle to raise rates quickly enough to offset inflation pressures. Spot gold was up 1.4pc at $1,347.91 an ounce by 1542 GMT, off an earlier low of $1,319.35. US gold futures for April delivery were up $20 at $1,350.40. “That inflation scare could be something that really plays into gold’s more bullish sentiment – if the Fed stays behind the curve, inflation could become problematic and gold could be a good hedge against that,” said Societe Generale analyst Robin Bhar. “The monetary authorities want stability,” he said. “It could delay monetary tightening if this correction turns into a bear trend in stock markets. That would make them cautious, and maybe that’s what the market’s looking at.”

Among other precious metals, silver was up 1.5pc at $16.79 an ounce, palladium gained 1.5pc to $999.60 and platinum was up 1.7pc at $993. The platinum market is set for another surplus this year after recording oversupply of 110,000 ounces in 2017, Johnson Matthey said in a report on Wednesday, though sister metal palladium is tipped for another deficit.

Published in Dawn, February 15th, 2018