By Katherine Dunn
Gold prices edged higher on Wednesday, as haven buying amid political uncertainty outweighed bullish signals on future rate increases from the U.S. Federal Reserve.
Gold for April delivery was recently up 0.2% at $1,227.10 a troy ounce on the Comex division of the New York Mercantile Exchange, after trading as low as $1,217.50 earlier in the session.
Prices fluctuated between gains and losses as data on Wednesday showed a mixed picture of economic strength. The consumer-price index, which measures inflation, had its strongest monthly gain in nearly four years, beating analyst expectations. Retail sales also came in stronger than expected, while industrial production numbers came up short.
While strong economic data helps boost confidence in markets and diminishes demand for safe-haven assets like gold, political uncertainty has given life to gold this year, analysts said.
Gold prices are a battle of "Janet vs. Donald," said Carsten Menke, a commodities analyst at Julius Baer.
On Tuesday, Fed Chairwoman Janet Yellen suggested the Fed could raise rates as soon as March, reviving expectations that had been dampened after a tumultuous start to the year. That gave a boost to the dollar and pushed down gold prices late Wednesday, as the metal doesn't bear interest and struggles to compete when rates rise.
Gold has seen a revival of haven interest following the inauguration of President Donald Trump. Markets have rallied partly on expectations about upcoming tax cuts and infrastructure spending, but details of the economic plan remain thin, analysts say.
"The gold market remains torn between the outlook for rising interest rates in the United States and economic uncertainties related to President Trump's policies," said Mr. Menke.
Those jitters helped gold shake off a stronger dollar on Wednesday. The WSJ Dollar Index was up 0.1%. The yield on the 10-year Treasury note rose from 2.468% to 2.496% on Wednesday, up for the fifth consecutive trading day.
These contrasting directions have held investors' attention, leaving little room for other trends to drive the gold market, including physical demand, said David Govett, head of precious metals at Marex Spectron.
"This my friends is the modern parable of the bullion market," Mr. Govett said in a morning note. "It is all about the dollar, it is all about the 10-year yields, it is all about Donald Trump and it is all about the Fed."
Stephanie Yang contributed to this article.
Write to Katherine Dunn at Katherine.Dunn@wsj.com