GOLD prices edged higher on Thursday (Jan 18), helped by a softer US dollar and lower Treasury yields, but hovered near five-week lows as investors tempered rate-cut optimism after hawkish comments from central bank officials and robust data.

Spot gold rose 0.2 per cent to US$2,010.59 per ounce by 0121 GMT, a day after it fell to US$2,001.72 – its lowest since Dec 13.

US gold futures rose 0.3 per cent to US$2,012.40.

The US dollar fell 0.2 per cent, making greenback-priced gold less expensive for foreign currency holders. Yields on the benchmark US 10-year Treasury notes also dropped.

US retail sales increased more than expected in December, keeping the economy on solid ground heading into the new year.

Atlanta Federal Reserve president Raphael Bostic is expected to speak at two separate events later in the day.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Bostic said inflation could “see-saw” if policymakers cut rates too soon, warning that inflation’s descent towards the central bank’s 2 per cent goal was likely to slow in the months ahead, the Financial Times reported on Sunday.

Money markets were betting on 142 basis points of Fed rate cuts this year, while pricing in a 61 per cent chance of a March easing, according to LSEG’s interest rate probability app, IRPR.

Lower interest rates decrease the opportunity cost of holding bullion.

Britain’s annual rate of consumer price inflation sped up for the first time in 10 months in December.

Market participants also monitored developments in the Middle East as Israel pressed its assault on southern Gaza.

The United States conducted another round of strikes against Houthi targets in Yemen after militants claimed their second attack this week on a US operated vessel in the Red Sea region.

Spot silver rose 0.4 per cent to US$22.61 per ounce, platinum climbed 0.2 per cent to US$885.38, and palladium gained 1.2 per cent to US$926.54. REUTERS