Gold gains as inflation worries, Europe COVID-19 dampens demand for security – Community News
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Gold gains as inflation worries, Europe COVID-19 dampens demand for security

  • European curbs helped give the yellow metal a new bidding analyst
  • Investors keep a close eye on Biden’s candidate for Fed chairman
  • Palladium Faces First Weekly Drop in Three

Nov 19 (Reuters) – Gold prices rose higher Friday as rising inflationary pressures and renewed coronavirus restrictions in Europe clouded growth prospects and enhanced the charm of a safe haven.

Spot gold rose 0.2% to $1,861.46 an ounce at 10:42 am ET (1542 GMT). US gold futures gained 0.2% at $1,864.

“Gold has focused much more closely on the inflation picture, discounting the impact of a stronger dollar and rising interest rates,” said Edward Meir, an analyst at ED&F Man Capital Markets.

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Treasury yields plummeted as concerns about new COVID-19 lockdowns in Europe boosted demand for safe-haven bonds, while the dollar also boosted, making gold more expensive for those holding other currencies.

“There’s a lot more monetary and fiscal stimulus in the pipeline…that should keep inflation fairly high and, in turn, keep the gold price high,” Meir added.

Stock markets went into a tailspin following news that Austria would again institute a full lockdown to deal with another wave of coronavirus infections and signs that Germany could do the same.

Saxo Bank analyst Ole Hansen said in a note that the lockdowns in Europe have helped the yellow metal get a new bid.

“Recent sweltering inflation pressures, especially the 6.2% recorded in the US, are likely to continue to support gold in its defense against the stronger dollar,” Hansen added.

Federal Reserve policymakers are considering the possibility of rate hikes earlier than they thought would be necessary. read more

Higher interest rates increase the opportunity cost of holding the non-interest-bearing metal.

Elsewhere, silver rose 0.4% to $24.89. Platinum fell 0.9% to $1,038.52, while palladium fell 2.3% to $2,084.42, on track for its first weekly decline in three.

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Reporting by Ashitha Shivaprasad and Swati Verma in Bengaluru; Editing by Amy Caren Daniel

Our Standards: The Thomson Reuters Trust Principles.