(adds comment and updates prices)
* US retail sales up in October
* The ECB president is due to speak later on Wednesday
* Gold may retest technical support at $1,849/oz
Nov 17 (Businesshala) – Gold rose on Wednesday on fears over inflation-backed prices, though a stronger US dollar limited gains.
Spot gold was up 0.3% at $1,855.19 an ounce, up by 0653 GMT. US gold futures rose 0.1% to $1,856.00.
Harshal Barot, Senior Research Consultant, South Asia, Metals Focus, said, “The macro background is still supportive for gold and inflation is still on the rise, but the continued strength in the dollar is limiting gold’s rally.”
The dollar was near a 16-month high, supported by data showing a jump in US retail sales last month. A stronger dollar increases the price of gold for buyers holding other currencies.
The report suggested that high inflation was still not driving spending, even though concerns over rising costs sent consumer sentiment to a 10-year low in early November.
“The more positive economic data you get, the faster the stakes are going to rise for interest rate hikes,” Barot said, adding that the European Central Bank’s sluggish stance also supported the dollar, increasing bullion’s headwinds. Hui.
ECB President Christine Lagarde said later on Monday that tightening monetary policy to curb inflation could affect the euro area’s recovery.
Gold is often viewed as an inflation hedge, but the opportunity cost of the non-interest-bearing metal increases with higher interest rates preventing price increases.
“Gold could trade below $1,850 in the near term as the lack of Fed stimulus comes to the fore,” said Michael Langford, a director at corporate advisory Airguide.
According to Businesshala Technical Analyst Wang Tao, spot gold is likely to return to the support level of $1,849 an ounce and a break below it may drop to $1,831.
Spot silver rose 0.6% to $24.94 an ounce. Platinum rose 0.3% to $1,064.30 and palladium rose 0.2% to $2,161.75. (Reporting by Nakul Iyer in Bengaluru; Editing by Rashmi Aich and Nick McPhee)