Gold set for best week in 6 months on inflation woes

[BENGALURU] Gold was flat on Friday (Nov 12) but was set for its biggest weekly jump in 6 months, as high US consumer prices drove interest in the metal as an inflation hedge.

Spot gold was steady at US$1,860.81 per ounce by 1.10 am GMT, after leaping to a 5-month peak on Wednesday (Nov 10). US gold futures edged down 0.1 per cent to US$1,862.20.

The metal is on track for its biggest weekly gain since May 7, rising 2.3 per cent so far.

Inflation pushed more broadly through the economy in October again challenging the Federal Reserve's outlook for only "transitory" price increases, offsetting recent wage hikes in a blow to consumers.

The sharp rise in inflation also prompted investors to boost bets that the Fed will raise interest rates sooner than expected.

Gold has benefited from easy monetary policy introduced to spur economic growth during the pandemic, but any hike in interest rates should reduce the non-interest bearing's metal's appeal as it raises its opportunity cost.

Euro zone inflation expectations are at a risk of continuing to overshoot the European Central Bank's 2 per cent target next year, according to a Reuters poll of economists.

Britain's economic recovery from the coronavirus outbreak lagged behind that of other rich nations in the July-September period, according to official data on Thursday (Nov 11) which underscored the interest rate dilemma facing the Bank of England.

The dollar index soared to its highest since July 2020, pressuring bullion by increasing its cost to buyers holding other currencies.

Spot silver rose 0.1 per cent to US$25.25 per ounce and was en route to its best week in 3.

Platinum was little changed at US$1,085.52 and was on course for its biggest weekly rise in a month. Palladium rose 0.2 per cent to US$2,063.60.

REUTERS