Gold prices edged up on Thursday as the dollar weakened and investors banked on the bullion as a hedge against inflation after data showed a rise in US consumer prices. Spot gold was up 0.3 percent at $1,354.34 an ounce as of 0745 GMT and headed for a fourth straight session of gains.
It hit its highest since Jan. 26 at $1,355.50 on Wednesday, and has gained nearly 4 percent since it dropped to a one-month low last week. US gold futures were down 0.1 percent at $1,356.8 per ounce on Thursday.
"Higher US inflation combined with the US dollar exhibiting zero correlation to higher interest rates amidst burdening duel deficits (trade and budget) should play out favourably for gold markets," said Stephen Innes, head of trading APAC at OANDA said. Inflation fears boost gold, which is seen as a safe haven against rising prices. But expectations that the Fed will raise interest rates to fight inflation make gold less attractive since it is not interest-yielding.
"Gold's technicals have improved dramatically in light of Wednesday's surge and could draw further fund buying," said INTL FCStone analyst Edward Meir. Spot gold is expected to break a resistance at $1,357 per ounce and rise to the next resistance at $1,372, driven by a wave C, according to Reuters technical analyst Wang Tao.
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