Gold Prices Hover Near 2-1/2 Week Highs on Weak Dollar

Investing.com – Gold prices were hovering near two-and-a-half week highs on Thursday, as sentiment on the greenback remained vulnerable despite the release of mostly positive U.S. data.

Comex were down 0.13% at $1,356.2 a troy ounce by 08:45 a.m. ET (12:45 GMT), not far from a two-and-a-half week peak of $1,359.70 hit earlier in the day.

The U.S. Commerce Department reported on Thursday that the producer price index rose in line with expectations by in January. Year-over-year, producer prices rose last month.

A separate report showed that U.S. initial jobless claims increased by 7,000 to in the week ending Feb. 10, in line with expectations.

Also Thursday, the Philadelphia Fed manufacturing index rose to in February from 22.2 the previous month, beating expectations for a downtick to 21.1, while the Empire State manufacturing index fell to from 17.70, confounding forecasts for a slip to only 17.50.

The precious metal remained supported as expectations for a faster pace of rate hikes by the Federal Reserve drove the benchmark Treasury yield to a four-year high of 2.928%, sending the U.S. dollar broadly lower.

Gold is sensitive to moves in both U.S. rates and the dollar. A weaker dollar makes gold less expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.26% at 88.69, its lowest since February 2.

Market participants were betting on a faster pace of U.S. rate hikes after the U.S. Commerce Department reported on Wednesday that consumer prices rose more than expected in January by . Year-over-year, consumer prices increased higher, beating expectations for a gain of 1.9%.

Elsewhere on the Comex, were down 0.46% at $16.79 a troy ounce.

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