LONDON: Gold bounced into positive territory on Tuesday as the dollar lost ground following news that US President Donald Trump has replaced Secretary of State Rex Tillerson, and after US inflation data in line with forecasts.

Spot gold was up 0.2 per cent at $1,325.09 per ounce by 1300 GMT, while US gold futures for April delivery gained 0.4pc to $1,325.70 an ounce.

Trump on Tuesday said he has replaced Tillerson with Central Intelligence Agency Director Mike Pompeo and has tapped Gina Haspel to lead the CIA, in the biggest shake up of his cabinet so far.

The dollar index gave up its gains and fell 0.17pc to 89.742, making commodities priced in the greenback cheaper for buyers using other currencies. Also weighing on the dollar was news that US consumer prices cooled in February, the latest indication that an anticipated pickup in inflation probably will be only gradual.

Some investors had been worried that a stronger than expected CPI reading could stoke expectations that the Federal Reserve will raise interest rates four times rather than three this year.

Georgette Boele, commodity strategist at ABN AMRO in Amsterdam, said gold was vulnerable after it had failed three times to rally since touching a 1-1/2 year peak of $1,342.70 on Jan. 25. “Overall the outlook is not looking that great in the short term. I still expect prices to go towards $1,300.” In other precious metals, silver rose 0.7pc to $16.60 per ounce. Net long positions in US silver futures increased for the first time since January, UBS analyst Joni Teves said in a note.

“Silver has been such an underperformer of late and one of the few positive factors currently is that net length is very lean. Despite recent gains, net speculative positions in silver are still only 18pc of the record.”

Published in Dawn, March 14th, 2018