(Adds graphic and updates prices)
*British inflation hits 10-year peak in October
* Gold may trade in the range of $1,850-$1,875 in the short term – Analyst
* Silver demand may increase this year – Silver Institute
Nov 18 (Businesshala) – Gold prices softened on Thursday as uncertainty over the pace at which central banks can raise interest rates could offset rising inflation and a fall in the dollar on bullion’s appeal .
Spot gold fell 0.1% to $1,864.40 an ounce, down by 0739 GMT. US gold futures fell 0.2% to $1,866.00.
Bullion prices on Tuesday hit their highest level in more than five months amid rising concerns over high inflation. Data showed British inflation hit a 10-year high last month and US consumer prices rose in October.
But rising inflation has also reinforced bets on interest rate hikes by the Bank of England in December and the US Federal Reserve next year.
“The gold market is positioned for the Fed to do something now, but the big question is will they accelerate taper plans?” Stephen Innes, Managing Partner, SPI Asset Management said.
“Until the Fed really signals a quick taper, gold should hold its current $1,850 and $1,875 range with the possible appointment of Lyle Brainard as the new Fed chair, which is considered Super Dove, It is likely to push it above $1,875.”
A White House spokesman said on Wednesday that US President Joe Biden will make a decision on the appointment of Fed chairman before Thanksgiving.
Gold is often viewed as a hedge against inflation, but higher interest rates drive up the opportunity cost of the non-interest-bearing metal.
Gold’s stop loss was a weakening dollar, which lowers the cost of bullion for buyers holding other currencies.
Spot gold XAU= may revisit its November 16 high of $1,876.90 an ounce as it could resume its uptrend, according to Businesshala technical analyst Wang Tao.
Spot silver held steady at $25.05 an ounce.
The Silver Institute said in a report that this year, for the first time since 2015, global silver demand could exceed one billion ounces.
Platinum changed little at $1,057.20, while palladium fell 1% to $2,166.95.