Gold Prices Back at $1,300 After Consumer Price Data

By Amrith Ramkumar Features Dow Jones Newswires

Gold prices rose Friday after the latest tepid reading on the U.S. economy.

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Gold for December delivery climbed 0.4% to $1,301.90 a troy ounce on the Comex division of the New York Mercantile Exchange. The precious metal was back above $1,300 for the first time in two weeks and on track to end a four-week losing streak following another weak inflation reading Friday that increased doubts about the Federal Reserve's interest rate plans.

Data released Friday showed the consumer-price index rose less than economists expected in September, with so-called core prices excluding food and energy increasing just 0.1%. Inflation has remained weak throughout the year, putting the Fed in a bind as it tries to stay committed to its plans for gradual rate hikes moving forward.

Expectations that the Fed will raise rates for a third time this year in December have weighed on gold prices recently because the precious metal struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise. But weak readings on the U.S. economy could create doubt about the Fed's outlook moving forward, buoying gold once again, some analysts and investors say.

"It's not a done deal," said Walter Pehowich, senior vice president at Dillon Gage Metals.

"The gold market is basically saying, 'We're not really too sure that you're absolutely going to raise rates in December,'" he said.

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Even if the Fed raises rates in December, persistent weak inflation could raise more doubts about its plans for 2018, Mr. Pehowich added.

The dollar fell following Friday's data, also supporting gold prices by making the dollar-denominated metal cheaper for foreign buyers. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, was recently down 0.3%.

Investors will be keeping a close eye on Fed signals and economic data moving forward. Some have said minutes from the central bank's September meeting released Wednesday that again showed lingering questions over inflation were driving a split among officials have also boosted gold prices recently.

Among base metals, copper for December delivery rose 0.4% to $3.1330 a pound--its highest level in a month--and was on track for a fifth straight session of gains. Since retreating from multiyear highs hit in early September, prices have rallied and are nearly back at their highest level in three years.

Strong import data out of China released Friday was boosting industrial metals prices, as the country is responsible for nearly half the world's copper consumption. Chinese copper imports rose to a six-month high last month, according to Commerzbank, while iron ore imports set an all-time high.

Many analysts are expecting next week's Communist Party congress to give the base metals market further direction by providing an update on Chinese economic policy.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

October 13, 2017 11:03 ET (15:03 GMT)