Gold heads for weekly gain on softer dollar, inflation expectations
New York (Oct 22) - Gold gained for a fourth consecutive session on Friday, propped up by a subdued dollar, while inflationary pressures boosted demand for the precious metal as a safe-haven investment.
Spot gold rose 0.5% to $1,790.91 per ounce by 0859 GMT, up 1.3% so far this week.
U.S. gold futures gained 0.6% to $1,792.00.
The dollar index headed for a second week of declines, lending support to gold by making it more attractive for buyers holding other currencies.
"There has been a pick up in inflation expectations and that has supported gold, along with a softer dollar and suppressed real yields," Saxo Bank analyst Ole Hansen said, adding, gold is making another attempt to challenge $1,800.
Further, Hansen said, while growth concerns could reduce the ability for central banks to be aggressive on hiking rates and in turn help gold, the "sharp recovery in stock market" remains a hindrance.
Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, denting the bullion's appeal.
Meanwhile, Euro zone inflation expectations among bond investors hit their highest levels in years on Friday, putting additional pressure on the European Central Bank and its insistence on maintaining crisis-era stimulus.
Elsewhere, Atlanta U.S Federal Reserve President Raphael Bostic said he expects high inflation to persist into 2022 and the central bank should raise interest rates by the end of next year.
However, Citigroup, in a note, said, "spot bullion trading remains lacklustre despite robust U.S. inflation data and increased investor concerns about stagflation risk... price action appears to struggle near or above $1,800/oz."
"Several forces might be driving what seems to be weaker bullish sentiment for gold—certainly versus 2019 and 2020."
Spot silver rose 0.7% to $24.30 per ounce and was on track for a fifth consecutive weekly gain.
Platinum jumped 0.9% to $1,057.91, while palladium fell 0.3% to $2,011.59. (Reporting by Arundhati Sarkar in Bengaluru; Editing by Krishna Chandra Eluri)
Reuters
