Gold prices turned positive on Tuesday as the US dollar lost ground after news that US President Donald Trump replaced Secretary of State Rex Tillerson, while US inflation data was in line with forecasts. Spot gold was up 0.3 percent at $1,326.49 an ounce by 1:42 pm EDT (1742 GMT), while US gold futures for April delivery settled up 0.5 percent at $1,327.10.
Trump fired Tillerson after a series of public rifts over policy on North Korea, Russia and Iran, replacing him with loyalist Central Intelligence Agency Director Mike Pompeo. "The dollar is lower and gold is higher off the Tillerson news. We've been seeing this pattern (of gold following the dollar) because there's no other strong factor leading to buying gold now," said Bill O'Neill, co-founder of Logic Advisors.
Also weighing on the dollar was news that US consumer prices cooled in February, the latest indication that an expected pick-up in inflation is likely to be only gradual. Some investors had been worried stronger-than-expected CPI data could stoke expectations that the US Federal Reserve will raise interest rates four times rather than three this year.
Higher interest rates typically make gold less attractive since it does not bear interest. "Overall the outlook is not looking that great in the short term. I still expect prices to go towards $1,300, said Georgette Boele, ABN AMRO commodity strategist. Silver rose 0.6 percent at $16.59 an ounce.
Platinum was up 0.4 percent at $966.60 an ounce, near a one-week high of $970.90. Palladium climbed 1.7 percent to $995.30 per ounce, after touching a one-week high of $997.40. The platinum/palladium ratio increased from late February. Palladium flipped to a premium over platinum last September for the first time since 2001.