(adds comments, updates prices)
* Gold faces strong resistance near $1,870 – Analyst
* UK inflation hits 10-year high
November 17 (Businesshala) – Gold prices rose on Wednesday as inflation concerns boosted demand for the safe-haven metal, even as Americans on rising bets of an early hike in interest rates in the United States. Dollar was near multi-month high.
Spot gold rose 0.7% to $1,862.56 an ounce, as of 1316 GMT. US gold futures rose 0.7% to $1,866.60.
“Investors are afraid of inflation getting out of control and are therefore buying gold to hedge against that risk,” said Carlo Alberto de Casa, external analyst at Kinesis Money.
Meanwhile, British inflation rose to a 10-year high as the domestic energy bill rockets, raising hopes the Bank of England will raise interest rates in December.
De Casa said a rise in rates remains a potential risk for gold and only a clear break above $1,875 could extend further gains. Higher interest rates increase the opportunity cost of holding interest-free gold.
The US dollar – which struggles with gold as a safe-haven of value – touched its highest level since July 2020 following better-than-expected US retail data.
“The Fed will certainly keep an eye on retail sales, among other measures of the economy such as inflation and wage growth, as the data provides valuable insights about consumer health,” said ThinkMarkets analyst Fawad Razakzada.
“That said, don’t think that a month’s worth of data is going to change the Fed’s rate path.”
The US Federal Reserve this month began phasing out its bond-buying and is expected to end purchases entirely by the middle of 2022. Its next policy-making meeting is in mid-December.
St. Louis Fed Chairman James Bullard urged a quick end to asset purchases to put the Fed in a position to raise rates as soon as spring.
Elsewhere, spot silver was up 1.2% to $25.09 an ounce, platinum rose 0.3% to $1,063.92 and palladium rose 0.3% to $2,165.68.