Gold Prices Continue to Rise as US Inflation Softens and Recession Fears Persist

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Gold prices have continued to rise for a fourth straight session as more evidence emerges that US inflation is slowing down. The price of gold is also being underpinned by persistent fears of a recession next year. This has led to safe haven demand for the yellow metal. Data released on Thursday showed that US producer price index inflation grew at a slower pace in March. This came after data was released showing that consumer price inflation was also easing. These readings have increased expectations that inflation is retreating, and this could encourage a less hawkish Federal Reserve.

The data has caused the dollar to fall to a near one-year low, while Treasury yields have also retreated, which is benefiting gold prices. The prospect of a less hawkish Federal Reserve benefits gold because higher interest rates increase the opportunity cost of holding non-yielding assets. Gold futures rose 0.3% to $2,060.75 an ounce by 22:16 ET (02:16 GMT), while spot gold rose 0.3% to $2,046.61 an ounce. Both instruments are set for a fourth straight day of gains and are also headed for a weekly rise of nearly 2% each.

Gold has been on a bull run for the past month, with safe haven flows into the yellow metal being initially sparked by fears of a banking crisis. While regulatory intervention has helped stem concerns over a broader crisis, the collapse of several US banks has seen markets pricing in a less hawkish stance from the Federal Reserve. There is also the potential for a recession this year due to economic pressure from high interest rates.

Other precious metals have also advanced on Friday and are set for a strong week. Platinum futures rose 0.6% to $1,069.15 an ounce, while silver futures rose 0.9% to $26.148 an ounce. Among industrial metals, copper prices have risen sharply, benefiting from a weaker dollar. Sentiment towards the red metal has also been aided by optimism over a demand recovery in China, a major importer. Copper futures rose 1% to $4.1680 a pound and were set to add nearly 4% this week. Although China's copper imports dropped 19% in March, there is hope that an overall improvement in the country's imports will lead to a pick-up in commodity demand over the coming months.

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