TORONTO — The loonie made gains against its U.S. counterpart in early trading Friday as traders took in tame inflation data and awaited a economic update being delivered to a parliamentary committee.

The Canadian dollar was ahead 0.10 of a cent at 101.27 cents US as a report showed inflation last month was lower than economists expected.

Statistics Canada said the pace of inflation eased in July to 2.7 per cent as increases in the price of gasoline slowed. Economists had expected prices to rise 2.9 per cent on an annual basis.

The gain compared with a 3.1 per cent increase for the consumer price index in June. It was the first time that inflation has been below three per cent since February.

On a month-over-month basis, the core index was up 0.2 per cent in July, in line with economist expectations.

"The tame core reading will buy the Bank of Canada time to remain on the sidelines and is clearly no obstacle for rate cuts should global recession risks intensify," said Sal Guatieri, senior economist at BMO Capital Markets.

Bank of Canada governor Mark Carney will appear before the Commons finance committee this morning along with Finance Minister Jim Flaherty to update Canadians on the economy amid continued market turmoil and fears of a return to recession in the United States.

Gold reached new heights Friday, soaring as high as US$1,881 an ounce as uncertainty about the global economy had anxious investors again snapping up the precious metal. In morning trading, the price backed off slightly, but remained $35 higher at US$1,857.

Copper prices added two cents to US$3.96 a pound.

Oil stepped back 91 cents to US$81.47 as investors feared a global slowdown might zap demand for crude.