News // Metal market
Gold rises as U.S. inflation data weighs on dollar
18 November 2010 , 23:18Reuters1639
U.S. core consumer inflation touched a record low in October and new home building sagged, lending support to the Federal Reserve's move to boost the sluggish economy through additional monetary easing.
The dollar lost about 0.4 percent against a basket of currencies, after rallying to seven-week highs.
"People expect the dollar to further deteriorate, which gives a strong incentive to buy into gold," said Ellison Chu, a senior manager at Standard Bank in Hong Kong, adding that short-covering was seen around the current price level.
"They are building up another round of long positions."
Spot gold gained 1.3 percent to $1,352.64 an ounce by 0645 GMT, after falling for four consecutive sessions.
U.S. gold futures rose by 1.1 percent to $1,351.7.
Spot gold is expected to fall to $1,317 per ounce as a bear trend has established and a wave "c' or wave "3" will unfold, said Wang Tao, a Reuters market analyst.
Robust physical demand in the region has also lent support to prices, dealers said.
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