Gold hits one-month peak as dollar, yields slip

By Kitco News / October 14, 2021 / www.kitco.com / Article Link

* Gold faces resistance at $1,800/oz and $1,835/oz- analyst

* Fed could start reducing stimulus by mid-Nov - minutes (Updates prices)

Oct 14 (Reuters) - Gold prices hit a one-month high on Thursday, as the dollar and U.S. bond yields eased while investors assessed how strong inflation data could shape monetary policy.

Spot gold rose 0.4% to $1,799.30 per ounce by 1100 GMT, having earlier hit its highest since Sept. 15 at $1,799.95. U.S. gold futures gained 0.4% to $1,801.30.

The dollar and benchmark U.S. 10-year Treasury yields slipped. A weaker dollar makes gold cheaper for buyers in other currencies.

Independent analyst Ross Norman described gold's rally as "constructive", but said it had to breach key technical resistance around $1,800 and $1,835, before another substantial move higher.

Investors took note of data showing Chinese producer prices posted a record annual increase last month and U.S. consumer prices increased solidly, which also fanned fears central banks might unwind their economic support and hike interest rates sooner.

Minutes from the U.S. Federal Reserve's September meeting showed it could start reducing stimulus by mid-November.

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," Norman said, noting uncertainty over the taper timeline had weighed on gold.

While gold is considered a hedge against higher inflation, reduced central bank stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of holding bullion.

"Should market participants continue ditching 'team transitory' as stagflation fears ramp up, gold prices could catch strong bids from safe haven plays and as a hedge against stubbornly elevated consumer prices," Han Tan, chief market analyst at Exinity said.

Spot silver rose 1.3% to $23.36 per ounce, platinum gained 1.5% to $1,035.47 and palladium jumped 3.5% to $2,178.89. (Reporting by Nakul Iyer and Eileen Soreng in Bengaluru; Edited by Emelia Sithole-Matarise and Vinay Dwivedi)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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