PRECIOUS-Gold rebounds from U.S inflation data-driven losses as dollar wilts


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    * Strong U.S. inflation report followed by weak retail sales 
    * Dollar surrenders gains, Wall Street swings higher 
    * Other precious metals hit one-week highs 
    * GRAPHIC-2018 asset returns: 
 (New throughout, updates prices, market activity and comments, 
adds second byline, NEW YORK dateline) 
    By Renita D. Young and Jan Harvey 
    NEW YORK/LONDON, Feb 14 (Reuters) - Gold prices climbed 
nearly 2 percent on Wednesday, rebounding from early losses that 
followed stronger-than-expected U.S. inflation data, as the 
dollar surrendered gains and equities swung higher.  
    The dollar initially rose after the U.S. Labor Department 
report showed U.S. consumer prices increased more than expected 
in January, and traders bet the U.S. Federal Reserve would boost 
interest rates faster than previously forecast.  FRX/  
    However, softer-than-forecast retail sales data and an 
immediate pullback in equities markets sparked concern that the 
Fed would struggle to raise rates quickly enough to offset 
inflation pressures.  
     Spot gold  XAU=  was up 1.7 percent at $1,351.81 per ounce 
by 1:37 p.m. EST (1837 GMT), after reaching $1,355.08, its 
highest since Jan. 26. U.S. gold futures  GCv1  for April 
delivery settled up $27.60 per ounce, or 2.1 percent, at $1,358. 
    Bullion was on track for its strongest daily performance 
since May 2017. Inflation fears generally prompt investors to 
buy the precious metal. 
    "Gold investors are looking into gold as a hedge against 
inflation and higher inflation expectations are boosting an 
interest in gold," said Suki Cooper, precious metals analyst at 
Standard Chartered Bank. 
    U.S. stocks fell immediately after the inflation report, 
then rebounded and traded higher in the afternoon. In addition 
to the strong inflation numbers, market watchers noted a 
surprise drop in January retail sales.  .N  
    "Given the weak retail sales report alongside (the inflation 
data), the markets are probably going to talk about stagflation, 
where you are getting stronger inflation but not really getting 
a stronger consumer," said Gennadiy Goldberg, an interest rate 
strategist at TD Securities in New York.  
    "Those two in tandem might be leading to this flattener in 
Treasuries, though retail sales are pretty volatile." 
    Stock markets, which scaled record peaks in recent months, 
slid sharply last week, dragging gold prices as investors sought 
refuge in the U.S. dollar. 
    Meanwhile, silver  XAG=  was up 1.9 percent at $16.86 an 
ounce after hitting a one-week high of $16.98. Palladium  XPD=  
gained 1.8 percent to $1,002.25, earlier hitting a one-week high 
$1,004.60 high. Platinum  XPT=  rose 2 percent at $993.24, 
earlier hitting $998.80, its highest in nearly three weeks.  
    The platinum market is set for another surplus this year 
after recording oversupply of 110,000 ounces in 2017, Johnson 
Matthey said in a report on Wednesday, though sister metal 
palladium is tipped for another deficit.*:nL8N1Q4523 
 (Additional reporting by Eileen Soreng in Bengaluru; Editing by 
David Gregorio and David Evans) 
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