Gold Gains as Traders Seek Haven Amid Persistent High Inflation
(Bloomberg) -- Gold rose to the highest in a month as investors sought haven amid stubbornly high inflation and the looming reduction in stimulus.
The U.S. consumer price index rose in September by more than forecast, resuming a faster pace of growth and underscoring the persistence of inflationary pressures in the economy. The yield on 10-year Treasuries fell after an initial increase following the data released Wednesday, boosting demand for non-interest bearing bullion.
“Real interest rates fell and that supported gold,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “There is a rising perception in the market that inflation could stay elevated for longer.”
Data on Thursday showed China’s factory-gate prices grew at the fastest pace in almost 26 years in September, adding to global inflation risks. The U.S. producer price index rose less than expected, according to a report.
Meanwhile, minutes of last month’s Federal Reserve meeting showed that officials broadly agreed they should start tapering bond purchases in mid-November or mid-December amid increasing concern about inflation. The pandemic-era stimulus measures were one of the key pillars in bullion’s rally to a record last year.
“The minutes contained nothing new,” Daniel Briesemann, an analyst at Commerzbank AG, wrote in a note. The bank expects tapering to be announced at the next meeting early in November, he said.
Spot gold added 0.2% to settle at $1,795.87 an ounce at 5 p.m. in New York, its highest close in four weeks. The Bloomberg Dollar Spot Index fell 0.1% after dropping 0.5% in the previous session. Silver, platinum and palladium all advanced.
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