Gold Rises on Recession Fears and Possible Fed Rate Hike Pause

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Gold prices climbed in Asian trading on Thursday, as softer-than-expected inflation data from the US prompted bets on an early rate hike pause by the Federal Reserve. The yellow metal has now moved closer to its record high from 2020, sitting around $50 away from it. The recent rally was triggered by softer-than-expected US consumer inflation data, which has caused the markets to price in the possibility that the Fed may pause its rate hike cycle as soon as June. Spot gold rose by 0.1% to reach $2,017.86 an ounce, while gold futures increased by 0.4% to $2,032.05 an ounce, setting both up for a third consecutive day of gains.

The Fed’s March meeting minutes had shown policymakers considering a rate hike pause, but they were also wary of a potential “mild recession” later in the year, following a banking crisis and rising interest rates that could undermine economic growth. Though fears of an imminent banking crisis have subsided, the yellow metal remains relatively well supported due to concerns that the US economy may shrink this year. Signs of a worsening economy will likely further support gold prices, as well as weakness in the dollar and US Treasury yields. Other precious metals experienced mixed reactions on Thursday, with platinum futures remaining flat and silver futures rising 0.8% to $25.675 an ounce.

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