Gold rallies to test over two-month high on US inflation data

Despite a little decline on Friday, gold prices were set to rise for the week as data showed signs of reducing inflation, raising optimism that the U.S.

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As of 00:48 GMT, spot gold was down 0.1% at $1,751.87 per ounce. For the week, it is up 4.2%. To $1,755.20, U.S. gold futures increased by 0.1%.

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Following the release of the U.S. inflation figures, gold prices increased by almost 3% on Thursday, reaching a two-month high

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The strongest indications yet that inflation was slowing allowed the Fed to scale back its significant interest rate hikes in October

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when consumer prices rose less than anticipated and the annual increase fell below 8% for the first time in eight months.

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Although gold is regarded as a hedge against inflation, the opportunity cost of owning non-yielding bullion increases when interest rates rise

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The week's decline in the dollar index was 2.4%. For foreign buyers, gold is more tempting when the currency is weak

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SPDR Gold Trust, the largest gold-backed exchange-traded fund in the world, said that its holdings increased on Thursday by 0.35% to 911.57 tonnes

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At $21.56, spot silver was down 0.5%. Palladium dropped 0.2% to $1,960.49 while platinum dropped 0.4% to $1,028.51.

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