Gold prices rise after higher-than-expected reading on U.S. inflation - MarketWatch

Gold futures ended higher Tuesday, with data showing U.S.

consumer prices in March rose for the fourth month in a row and the pace of inflation hit the highest level in 2½ years lifting the metal’s appeal as a hedge against inflation.

The 12-month rate of inflation rose to 2.6% in March from 1.7%.

The reading “came in slightly over expectations, an indication that the U.S.

economy is heating up a bit more than expected,” Jason Teed, co-portfolio manager of the Gold Bullion Strategy Fund.

He pointed out that much of inflation pressure came from rising gasoline prices and that core inflation was more muted.

 rose $14.90, or 0.9%, to settle at $1,747.60 an ounce, a day after the precious metal logged the lowest finish for a most-active contract since April 5, FactSet data show.

“Inflation will probably pick up further and the numbers for the next few months may appear abnormally large as base effects from the 2020 lockdowns skew the data,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, referring to distortions in monthly inflation figure that results from abnormally high or low levels in the year-ago period.

“The Fed expects inflation to then settle down after a temporary acceleration.

In fact, with consumers’ inflation expectations rising, this is could translate to actual rise in price levels,” he said.

The move for gold on the session thus far also comes as bond yields, which compete against gold for haven demand, moved lower after the inflation data.