Gold prices fell on Friday, due to the rise in the price of the dollar, but they are heading to achieve their largest weekly gains in 6 months.
Concerns about rising consumer prices in the United States reinforced the attractiveness of the yellow metal in the context of an inflation hedge.
Gold Prices Today
By 08:36 AM GMT (11:36 AM Mecca Al-Mukarramah), the price of gold futures – for December delivery – decreased by 0.34%, to record the level of $ 1857.50 an ounce.
The spot price of the yellow metal also declined by 0.45%, recording $1853.66 an ounce.
At the same time, the price of silver futures contracts – for December delivery – decreased by 0.52%, to $ 25.17 an ounce.
The spot platinum price decreased by 1.28%, at $1074.76 an ounce, while the spot palladium price fell by 1.23%, to reach $2035.73 an ounce.
The dollar index rose to its highest level since July 2020, putting pressure on bullion by increasing its cost to buyers holding other currencies.
Despite falling prices, gold is on track for its biggest weekly gain since May 7, after US consumer prices posted their biggest rise in more than 30 years last month.
“Until the supply chains open up, there will be constant pressure on prices, and that should support gold,” said Stephen Innes, managing partner at SBI Asset Management.
Broader inflation pushed through the economy in October, defying the Fed’s expectations of only “temporary” price increases, offsetting recent wage increases in a blow to consumers.
The sharp rise in inflation also prompted investors to raise bets that the Federal Reserve will raise interest rates sooner than expected.
Gold prices could rise for some time, as prolonged supply chain issues could lead to long-term inflation, and higher interest rates may not keep pace, Innes said, adding that the price-raising cycle should eventually push bullion lower.
This comes in conjunction with inflation expectations in the euro zone at risk of continuing to exceed the European Central Bank’s 2% target next year, according to a Reuters poll of economists.
The British economy’s recovery from the coronavirus outbreak also lagged behind that of other rich countries in the July-September period, according to official data released on Thursday, highlighting the interest rate dilemma facing the Bank of England.
Gold has benefited from easy monetary policy offered to stimulate economic growth during the pandemic, but any rate hike should reduce the attractiveness of the non-interest bearing metal, as it raises the opportunity cost.
For his part, a director at AirGuide Advisory, Michael Langford, said: “Gold should head below $1,850 in the short term, as the positive support factors from the tapering Federal Reserve and the additional influx of stimulus funds fade.”
SOURCE : FXSTREET