Gold futures tallied mild losses Friday after U.S. inflation data for January proved tamer than expected and as traders digested the Federal Reserve's surprise step towards normalized lending.
The Labor Department estimated core consumer prices fell 0.1% in January, the first such decline since 1982.
The report weighed on the dollar, as low inflation means there is less of a need to hike Fed Funds rates just yet, "and might help bullion on the day, at least before book-squaring rituals become manifest later," said Jon Nadler, senior analyst at Kitco Metals Inc.
In early trade on the New York Mercantile Exchange, gold for April delivery was off $4.7 at $1,114.0 an ounce, off its intraday low of $1,099.30 an ounce.
The contract had ended with a loss of $1.40 in New York Thursday after touching a low of $1,098.10.
Prices had come off their lows by the close of Thursday's trading session as investors picked up on thinking that central banks would likely buy the remainder of gold being sold by the International Monetary Fund, which on Wednesday said it plans to sell 191.3 tons of gold on the open market.
The IMF gold sales news is "not new news," said Peter Grandich, a metals writer at Agoracom.com, in a note to clients late Wednesday.
"Even if this doesn't lead to someone or group buying part or all of the proposed amount, it's my understanding that the amount is going to be part of the already known agreed-upon amount the Washington Accord group had in its powers to sell anyway," he said.
And the IMF sales, "which have been less than what many first thought they would be anyway, have become almost non-factors," he said.
Gold Futures Moderate Losses After CPI
Source: MarketWatch, Myra P. Saefong and Kate Gibson (2/19/10)
"The IMF sales. . .have become almost non-factors."