PRECIOUS-Gold rises to one-month high on U.S. dollar, yields retreat

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* US initial weekly jobless claims decline

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* Gold faces resistance at $1,800/oz and $1,835/oz -analyst

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* Fed may start reducing stimulus by mid-November – minute (update price)

October 14 (Businesshala) – Gold touched a one-month high on Thursday as dollar and US bond yields fell, allowing investors to turn to bullion as an inflation hedge.

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Spot gold was up 0.2% at $1,796.59 an ounce at 13:46 a.m. EDT (1746 GMT), hitting its highest level since Sept. 15 at $1,800.12. US gold futures closed 0.2% higher at $1,797.9.

It also seemed like gold was largely ignoring the better US weekly labor data.

“Traders and investors are finally realizing that rising inflation has, historically, been bullish for metals, no matter what the Federal Reserve does,” said Jim Wyckoff, senior analyst at Kitco Metals.

Wyckoff said further volatility in equities this month could also lead to some safe demand for gold.

Broader market sentiment remains fragile, as the global energy crisis has raised fears that the resulting jump in prices could slow growth.

Chinese producer prices posted a record annual increase last month and US consumer prices also rose on fears that central banks may open up stimulus sooner than expected.

While gold is considered an inflation hedge, lower incentives and higher interest rates raise government bond yields, increasing the opportunity cost of holding non-yielding bullion.

But “now that we’ve got a little bit of visibility into what the Fed intends to do in terms of tapering, and it’s a relatively small amount; it’s been a positive for gold,” said independent analyst Ross Norman. Gold faced technical resistance at $1,800 and $1,835.

The latest Fed minutes showed it could begin to ease by mid-November.

TD Securities said in a note that while “intense focus on pricing the Fed’s exit has ignored rising inflationary risks,” this has yet to translate into additional gold demand.

However, as the energy crisis intensifies, the reasons for owning gold are “growing more compelling.”

Silver rose 1.7% to $23.45 an ounce and palladium rose 1.4% to $2,136.18. Both the metals had hit their highest levels a month ago.

Platinum jumped 3.1% to 1,051.78, its highest level since early August. (Reporting by Bharat Govind Gautam, Nakul Iyer and Ashita Sivaprasad in Bengaluru; Editing by Paul Simao, Shailesh Kuber and Uttaresh. V)

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