* Dollar hits 16-month high
* Silver set for best week in three
* Platinum on the way to biggest weekly increase in 1 month (adds comment and updated prices)
November 12 (Businesshala) – Gold prices tumbled on Friday as a stronger dollar, but were on track for their biggest weekly gain in six months as rising US consumer prices boosted the metal’s appeal as inflation hedges Gave.
Spot gold was down 0.2% to $1,857.84 an ounce by 0625 GMT, after hitting a five-month peak on Wednesday. US gold futures ended 0.1% lower at $1,861.30.
The dollar index rose to its highest level since July 2020, putting pressure on bullion by raising its cost for buyers holding other currencies.
But after recording the sharpest jump in US consumer prices in more than 30 years last month, the metal is still on track for its biggest weekly gain since May 7.
Stephen Innes, managing partner, SPI Asset Management, said, “Until the supply chain opens, prices will remain under pressure and this should support gold.”
The sharp rise in inflation has prompted investors to bet that the Federal Reserve will raise interest rates sooner than expected.
Gold prices could rise for a while because prolonged supply chain issues could lead to prolonged inflation, and interest rate hikes may not keep pace with it, Innes said, adding to the rate-hike cycle. should eventually decrement the boolean.
Higher interest rates increase the opportunity cost of the non-yielding metal.
Michael Langford, a director at corporate advisory Airguide, said gold should trend below $1,850 in the near-term on positive sentiment from the Fed’s gradual tapering and additional inflows of stimulus funds.
Spot silver fell 0.1% to $25.22 an ounce, but was on track for its best week in three weeks.
Platinum fell 0.2% to $1,083.67, but it was certainly its biggest weekly increase in a month. Palladium fell 0.4% to $2,049.66. (Reporting by Nakul Iyer in Bengaluru; Editing by Rashmi Aich and Ramakrishnan M)