NEW YORK: Gold gained on Friday as its safe-haven appeal was boosted by elevated U.S. consumer prices, which also cooled some bets for aggressive interest rate hikes since the jump in inflation was not as big as expected.
Spot gold rose 0.5% to $1,783.61 per ounce at 10:46 a.m. ET (1546 GMT), having dropped for the past two sessions. U.S. gold futures gained 0.4% at $1,784.30.
“The latest inflation report did not come in as hot as some were expecting and that should keep Federal Reserve rate hike expectations between two or three rate hikes in 2022,” Edward Moya, senior market analyst at brokerage OANDA.
“Gold prices will embrace today’s report as it likely pushes back that first Fed rate hike into the middle of next year.”
Bullion also drew strength from a slip in the dollar, which increased its appeal for overseas buyers, and as U.S. Treasury yields fell after data showed U.S. consumer prices increased further in November, leading to the largest annual gain since 1982.
Although gold is considered an inflation hedge, reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of non-interest-bearing bullion.
“The potential for interest rate hikes does drag at the heels of the gold market, but the underlying fundamental theme is the inflationary pressures, which will be supportive,” said David Meger, director of metals trading at High Ridge Futures.
Focus was now on the Fed’s policy meeting on Dec. 14-15.
Vincent Tie, a sales manager at dealer Silver Bullion in Singapore, said gold was also seeing demand from “value-driven investors who are dollar-cost averaging their holdings with the price dipping under $1,800.”
Spot silver rose 1% to $22.14 per ounce.
Platinum rose 0.3% to $936.94 per ounce, was on track for its first weekly gain in four. Palladium fell 2.2% to $1,771.99.