LONDON: Gold prices rose on Wednesday as concerns over rising inflation, due to powerful central bank stimulus to stem the economic impact of the coronavirus pandemic, kept bullion well bid over a 7-1/2 year high reached earlier in the session.

Spot gold rose 0.5% to $1,775.18 per ounce at 11:11 a.m. EDT (1511 GMT). US gold futures were up 0.4% to $1,789.20 per ounce. The precious metal scaled $1,779.06 earlier in the day, which was its highest since early October 2012.

"Long run inflation expectations are still subdued and have substantial room to rise," said Daniel Ghali, commodity strategist at TD Securities.

"When you have low interest rates and rising inflation, that means that real rates are getting suppressed and that's the factor driving gold prices higher."

Bullion has climbed more than 16% this year, supported by stimulus measures and interest rate cuts by central banks, since the non-yielding metal is considered a hedge against inflation and currency debasement.

"The technical charts for gold and silver are fully bullish (especially in gold), suggesting still more upside price potential for both metals (silver and gold) in the near term," said Kitco Metals senior analyst Jim Wyckoff.

The rise in infections of Covid-19, the disease caused by the new coronavirus, has spurred debate over whether there will be reinstated lockdowns of businesses that would mean further damage to recovering economies, said Wyckoff.

Indicative of investor sentiment, holdings in SPDR Gold Trust, rose 0.28% to 1,169.25 tonnes on Tuesday, its highest since April 2013.

Other precious metals fell, with silver declining 0.9% to $17.79 per ounce. Palladium slipped 1.2% to $1,900.04 and platinum fell 2.8% to $806.08.