Gold climbs as dollar pauses ahead of US inflation data

By Deep Kaushik Vakil

(Reuters) - Gold climbed back up above the key $2,000 level on Tuesday as the dollar came off last session's peak, while traders hunkered down for Wednesday's U.S. inflation data for cues on future interest rate hikes.

Spot gold rose 0.8% to $2,005.79 per ounce by 2:00 p.m. EDT (1800 GMT) while U.S. gold futures settled 0.8% higher at $2,019.00.

Bullion found some respite from a pause in the dollar, following a bounce in the previous session, also helping offset pressure from higher Treasury yields.

"At this stage of the game, the market isn't particularly fussed on whether we get another 25 basis points" from the Federal Reserve in May, said Bart Melek, head of commodity strategies at TD Securities.

"The market is looking at the pivot and signalling lower rates as we move deeper into the second half of 2023."

The prospect of the Fed raising its benchmark interest rate only once more by 25 basis points is a useful starting point, said New York Fed President John Williams, while Chicago Fed President Austan Goolsbee said the central bank should be cautious about raising interest rates in the face of recent banking stress.

Gold shed nearly 1% on Monday after strong U.S. jobs data on Friday raised the chances of a May rate hike to around 70%.

The U.S. consumer price index (CPI) data on Wednesday could yield signs on how long the Fed would continue its campaign against inflation.

"Should CPI push higher and support monetary policy tightening after strong non-form payroll figures, real yields may turn higher thus increasing the opportunity cost of holding gold," DailyFX analyst Warren Venketas wrote in a note.

Central banks should not halt their fight against inflation because of financial stability risks, IMF chief economist Pierre-Olivier Gourinchas said.

Silver was up 0.8% to $25.08 per ounce, platinum gained 0.6% to $997.20 while palladium jumped 3% to $1,454.17.

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(Reporting by Deep Vakil in Bengaluru; Editing by Christina Fincher, David Holmes and Krishna Chandra Eluri)