NEW YORK: Gold prices edged higher on Friday, as rising inflationary pressures and renewed coronavirus restrictions in Europe clouded growth outlook and underpinned the metal’s safe-haven charm.
Spot gold rose 0.2% to $1,861.46 per ounce by 10:42 a.m. ET (1542 GMT). US gold futures gained 0.2% at $1,864.
“Gold has started focusing much more closely on the inflation picture and discounted the impact of a stronger dollar and rising interest rates,” said Edward Meir, analyst with ED&F Man Capital Markets.
US Treasury yields tumbled as worries about new COVID-19 lockdowns in Europe increased demand for safe-haven bonds, while the dollar also got a boost, making gold more expensive for those holding other currencies.
“There’s still a lot more monetary and fiscal stimulus in the pipeline... that should keep inflation fairly elevated and keep gold prices in turn high,” Meir added.
Stock markets went into a tailspin after news that Austria would reimpose a full lockdown to tackle a new wave of coronavirus infections and signs that Germany might do the same.
Saxo Bank analyst Ole Hansen in a note said the lockdowns in Europe helped give the yellow metal a fresh bid.
“The recent white-hot inflation prints, especially the 6.2% recorded in the US, will likely continue to support gold in its defence against the stronger dollar,” Hansen added.
Federal Reserve policymakers are pencilling in the possibility of earlier interest rate hikes than they thought would be needed.
Higher interest rates raise the opportunity cost of holding the non-interest-bearing metal.
Elsewhere, silver rose 0.4% to $24.89. Platinum slid 0.9% to $1,038.52, while palladium declined 2.3% to $2,084.42, on course for its first weekly decline.
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