(Adds comment, updates prices)
* U.S. retail sales data due at 1330 GMT
* Gold is able to defend its ground against the dollar - analyst
Nov 16 (Reuters) - Gold prices climbed to their highest level in over five months on Tuesday as rising price pressures burnished the metal’s appeal as an inflation hedge and countered a strong dollar.
Spot gold rose 0.6% to $1,872.80 per ounce by 1236 GMT, while U.S. gold futures climbed 0.5% to $1,875.00.
The metal has added more than 2% since last Tuesday after data showed U.S. consumer prices posted the biggest annual gain in 31 years last month. “The notion that U.S. inflation has yet to peak should keep bullion well bid, as long as the Fed doesn’t veer from its patient approach to any rates lift off,” said Han Tan, chief market analyst at Exinity.
Gold’s gains came despite the dollar holding close to a 16-month high and benchmark U.S. 10-year Treasury yields steadying near a three-week peak. A stronger dollar increases gold’s cost to buyers holding other currencies.
Therefore, the picture on the gold market seems to have changed considerably since the U.S. inflation data as “gold has been able to defend its territory despite a very firm dollar”, Commerzbank analyst Daniel Briesemann said.
“Bullion could rise to $1,900 by the end of the year,” Briesemann added.
Investors now eye U.S. retail sales data due at 1330 GMT, that could influence the U.S. Federal Reserve’s stance on rates hikes.
“Further signs that the U.S. economic recovery is waning amid persistently elevated consumer prices could prompt more investors towards gold as a safe haven,” Exinity’s Tan said.
Richmond Federal Reserve President Thomas Barkin has said the Fed will not hesitate to raise interest rates, but the central bank should wait to gauge if inflation and labor shortages prove to be more long-lasting.
Rate hikes tend to weigh on gold, as they push bond yields up, raising the metal’s opportunity cost.
Elsewhere, spot silver climbed 0.8% to $25.25 per ounce, platinum gained 0.9% to $1,096.10, and palladium rose 0.7% to $2,168.30. (Reporting by Arundhati Sarkar and Nakul Iyer in Bengaluru; Editing by Shailesh Kuber and Aditya Soni)
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November 16, 2021 at 03:59PM
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PRECIOUS-Gold firms near 5-month peak on persistent inflation bets - Reuters
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