Gold extends gains to one-week high as US yields lose ground

Gold prices rose in European trade on Wednesday against a basket of major rivals, hitting one-week high as the dollar loses ground.

Recent weak US inflation data hurt chances of another US interest rate hike in October.

Gold Prices Today

Gold prices rose 0.5% to $1,972 an ounce, the highest in a week, after rising 0.9% on Tuesday, the largest such profit since November 2. 

The Dollar 

The dollar index is trading near two-month low at 103.99 against a basket of major rivals, with analysts expecting even more losses to come, in turn boosting gold prices.

US Yields

US 10-year treasury yields tumbled 0.5% today, plumbing two-month lows at 4.428% and boosting non-yielding assets.

Such gains came after US consumer prices showed a sharp slowdown in October, all but confirming the end of the current policy tightening cycle.

US Inflation Data

In the US, consumer prices rose 3.2% y/y in October, slowing down from 3.7% in the previous reading, and below estimates of 3.3%.

Core prices, excluding food and energy, rose 4% y/y, down from 4.1% in the previous reading.

US Rates

Following the data, the odds for a US interest rate hike in December plunged to 1%.

Fresh Data

Now investors await important US retail sales and producer prices data for October later today to gauge the likely path ahead for US policies.

The SPDR

Gold holdings at the SPDR Gold Trust remained flat yesterday at 870.45 tonnes, the highest since October 3.