LONDON: Gold rose on Wednesday, boosted by concerns of an economic hit from soaring energy prices and a retreat in the dollar, as investors braced for US inflation data.
Spot gold rose 0.6% to $1,769.68 per ounce by 1024 GMT, while US gold futures gained 0.7% to $1,770.60.
The benchmark US 10-year Treasury yields eased from June highs, while the dollar retreated, making bullion cheaper for overseas buyers.
There are inflationary pressures on the global economy and “gold is attempting a small upside break, but there’s not much in terms of momentum in the price action”, said Ole Hansen, an analyst at Saxo Bank.
“If the CPI data surprises to the upside, and there’s little bit more volatility in stock market, it could be a supportive factor for gold. But expectations of tapering are holding gold down.”
The US consumer price inflation data due at 1230 GMT and the release of minutes from the US Federal Reserve’s September meeting at 1800 GMT, come amid fears that rising inflation, stoked in part by a global energy crisis, may stall growth.
“Given how the stagflation talks continue to drain global sentiment and promote risk aversion, this could support gold bugs,” said FXTM analyst Lukman Otunuga.
Fed policymakers said on Tuesday the economy has healed enough for the central bank to begin withdrawing stimulus, cementing expectations for tapering as soon as next month.
Gold is considered an inflation hedge. However, reduced stimulus and interest rate hikes push government bond yields higher, translating into higher opportunity cost for holding non-yielding bullion.
If the inflation data, the FOMC minutes or other US economic reports fail to significantly move gold prices, the next catalyst would be the Fed’s November meeting, added Otunuga.
Spot silver rose 1.2% to $22.81 per ounce, platinum was little changed at $1,007.51, and palladium rose 1.2% to $2,070.15.