Gold rises on weaker United States dollar ahead of USA inflation data

A pedestrian walks past a window displaying a representation of a gold bar at a bullion broker in Piccadilly London

Spot gold was up 0.3 per cent at $1,320.19 an ounce, as of 0111 GMT.

As for other precious metals, silver for March delivery rose 35 cents, or 2.12 percent, to settle at 16.878 dollars per ounce.

Gold prices climbed almost 2 percent on Wednesday, rebounding from early losses that followed stronger-than-expected USA inflation data, as the dollar surrendered gains and equities swung higher.

The dollar index, which measures the greenback against a basket of currencies, eased 0.2 per cent to 90.291 after gaining 1.4 per cent last week.

In other news, the Commerce Department said on Wednesday that USA retail sales decreased 0.3 percent last month, the largest decline since February 2017, as households cut back on purchases of motor vehicles and building materials.

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Stock markets, which scaled record peaks in recent months, slid sharply last week, dragging gold prices as investors sought refuge in the USA dollar. Last week the index rose 1.4 percent because of a flight to safer assets amid a rout in global equity markets. Precious metals, which are often pegged to dollars, tend to rise when the buck weakens because a falling dollar can make buying those assets cheaper for investors using weaker monetary units.

The dollar initially rose after Wednesday's inflation report showed USA consumer prices rose more than expected in January, as traders bet that rising price pressures could spur the Federal Reserve to boost interest rates faster than previously forecast.

Last week, the benchmark S&P 500 fell 5.2 percent, its biggest decline since January 2016.

"It's just common sense for some portfolio managers to exhibit some short-covering behaviour especially after the sell-off we saw last week".

Spot gold is expected to end its current bounce in a resistance zone of $1,325 to $1,330 per ounce and then revisit its February 8 low of $1,306.81, said Reuters technical analyst, Wang Tao. Platinum rose 2 percent at $993.24, earlier hitting $998.80, its highest in almost three weeks. On Friday, it fell to $953 an ounce, the lowest since January 10. On Friday, it fell to its lowest since October 25.

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