(iterates, adds comments, updates prices)
* Gold faces strong resistance near $1,870 – Analyst
* UK inflation hits 10-year high
Nov 17 (Businesshala) – Gold prices jumped on Wednesday as inflation concerns pushed investors toward the safe-haven metal, unaffected by the dollar’s strength, driven by bets for early interest hikes by the US Federal Reserve .
Spot gold rose 0.9% to $1,866.31 an ounce, after a seven-day rally, after falling in the past two sessions.
US gold futures rose 0.9% to $1,869.90.
“The underlying support for gold and silver remains the inflationary pressure that we continue to see in the market,” said David Meager, director of metals trading at High Ridge Futures.
The US dollar – which also struggles with gold as a safe-haven of value – touched its highest level since July 2020, also strengthened by better-than-expected US retail data.
Bullion could come under some “mild pressure” if Fed speakers, in the near term, signal asset purchases to fight inflation may accelerate reduction or if the market believes rates will rise sooner. Maybe, Megger said.
Higher interest rates increase the opportunity cost of holding interest-free gold.
The Fed began phasing out its bond-buying this month and expects to end purchases entirely by the middle of 2022. Its next policy-making meeting is in mid-December.
Kinesis Money external analyst Carlo Alberto de Casa said a rate hike remains a potential risk for gold and that only a clear break above $1,875 could extend further gains.
Rising prices, driven mostly by rising energy costs, continue to be a concern in other economies as well.
British inflation hit a 10-year high, prompting the Bank of England to raise interest rates in December, while Canada’s annual rate accelerated again in October and hit a February 2003 high.
Elsewhere, spot silver was up 1.4% to $25.14 an ounce, platinum rose 0.5% to $1,066.23 and palladium was up 1.1% to $2,181.20.