IGI Logo

Gold prices slipped on Friday, as a stronger-than-expected U.S. inflation reading and hawkish comments from a Federal Reserve official ramped up odds for a hefty interest rate hike next month, sending Treasury yields higher.

FUNDAMENTALS

* Spot gold fell 0.1% to $1,825.29 per ounce by 0141 GMT, while U.S. gold futures dropped 0.7% to $1,824.50.

* U.S. consumer prices rose solidly in January, leading to the biggest annual increase in inflation in 40 years, fuelling speculation for a 50 basis point rate hike from the Fed next month.

* St. Louis Federal Reserve President James Bullard said he wanted to see a full percentage point worth of rate hikes over the next three policy meetings by the central bank.

* Rate futures showed a 62% chance that the Fed will raise interest rates by 50 basis points in March following Bullard's remarks, from a 30% chance late on Wednesday.

* Benchmark 10-year Treasury yields hovered close to Thursday's August 2019 high of 2%. [US/]

* Higher yields and rate hikes dent the appeal of bullion by raising the opportunity cost of holding non-interest paying gold.

* Russia and Ukraine said they had failed to reach any breakthrough in a day of talks with French and German officials aimed at ending an eight-year separatist conflict in eastern Ukraine.

* Britain said the "most dangerous moment" in the West's standoff with Moscow appeared imminent, as Russia held military exercises in Belarus and the Black Sea following the buildup of its forces near Ukraine.

* Silver fell 0.3% to $23.12 per ounce, platinum was down 0.5% to $1,021.49, and palladium dropped 1% to $2,231.70 per ounce.

DATA/EVENTS (GMT)

0700 UK GDP Est 3M/3M Dec

0700 UK GDP Estimate YY, MM Dec

0700 UK Manufacturing Output MM Dec

0700 Germany HICP Final YY Jan

0700 UK GDP Prelim QQ, YY Q4

1500 US U Mich Sentiment Prelim Feb