Gold ticks higher as dollar weakness offsets rate-hike bets

Gold prices edged up on Wednesday as the dollar eased, while U.S. inflation data released on Tuesday raised expectations that the Federal Reserve will persist with monetary policy tightening.

FUNDAMENTALS

* Spot gold was up 0.1% at $1,856.47 per ounce, as of 0105 GMT. U.S. gold futures were little changed at $1,865.80.

* The dollar index eased 0.1%, making greenback-priced gold less expensive for buyers holding other currencies.

* The consumer price index increased 0.5% last month, the Labor Department said on Tuesday, in line with expectations. In the 12 months through January, the CPI increased 6.4% which was the smallest gain since October 2021 and followed a 6.5% rise in December.

* Fed officials said the U.S. central bank would need to keep gradually raising interest rates to beat inflation and suggested sticky price pressures driven by a hot jobs market may push borrowing costs higher than they once thought.

* Rising interest rates discourage investors from placing money in non-yielding assets like gold.

* Money markets now expect the Fed's target rate to peak at 5.257% in July, from a current range of 4.50% to 4.75%.

* European Central Bank governing council member Gabriel Makhlouf said the bank could increase interest rates above 3.5% and likely will not cut them again this year, in an interview with the Wall Street Journal.

* Spot silver edged up 0.1% to $21.86 per ounce and platinum rose 0.3% to $933.05. Palladium rose 0.3% to $1,501.08, after hitting its lowest since late-August 2019 in the previous session.