NEW YORK: Gold touched a one-month high on Thursday, as a dip in the dollar and US bond yields allowed investors to turn to bullion as an inflation hedge. Spot gold gained 0.2% at $1,796.59 per ounce by 13:46 p.m. EDT (1746 GMT), after hitting its highest since Sept. 15 at $1,800.12. US gold futures settled up 0.2% at $1,797.9.

Gold also seemed to largely overlook better US weekly labour data. "Traders and investors are finally realizing that rising inflation is, historically, bullish for metals, no matter what the Federal Reserve does," said Jim Wyckoff, senior analyst at Kitco Metals.

Further volatility in equities this month may also spark some safe-haven demand for gold, Wyckoff added. Wider market sentiment has remained fragile, as a global energy crunch stoked fears that the resultant jump in prices may slow growth.

Chinese producer prices posted a record annual increase last month and US consumer prices also increased, fanning fears that central banks might unwind stimulus sooner than anticipated. While gold is considered an inflation hedge, reduced stimulus and interest rate hikes push government bond yields up, raising the opportunity cost of holding non-yielding bullion.

But "now that we've got a little bit of visibility on what the Fed intends to do in terms of tapering, and it's a relatively small amount; that's been positive for gold," independent analyst Ross Norman said, adding gold faced technical resistance around $1,800 and $1,835. Latest Fed minutes showed it could start tapering by mid-November.

TD Securities said in a note that while the "intense focus on pricing the Fed's exit has ignored rising stagflationary risks," that's yet to translate into additional gold demand.