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Monday, December 6th, 2021

Gold hovers near 5-month peak on weaker dollar, inflation jitters

Gold scaled a near five-month peak on Tuesday on support from a weaker dollar and growing concerns over inflation, with investors awaiting key U.S. data due later this week to gauge the extent of economic recovery.

Spot gold rose 0.2% to $1,911.02 per ounce, having earlier touched its highest since Jan.8 at $1,916.4. U.S. gold futures were up 0.4% at $1,913.60.

“It is quite clear from Friday’s (consumer price) data that there are ongoing concerns about inflation emerging. This is all part of a developing story, and one which would develop very much in the second half of this year,” independent analyst Ross Norman said.

Although U.S. Treasury yields have been relatively firm, it is the weaker dollar that is boosting gold now, he added.

The dollar index was down 0.3% against its rivals.

Data showed last week U.S. consumer prices surged in April, with a measure of underlying inflation blowing past the Federal Reserve’s 2% target.

Gold, considered an inflationary hedge, has benefited from expectations for higher inflation as central banks around the world eased policy. However, Fed Chair Jerome Powell has repeatedly stated that higher inflation will be transitory.

The focus this week will be on key U.S. economic readings, including non-farm payrolls data on Friday.

Global stocks scaled new peaks on Tuesday ahead of European and U.S. economic data releases.

Spot gold may rise into a $1,932-$1,953 range, Reuters technical analyst Wang Tao said.

Silver gained 0.9% to $28.29 per ounce, after hitting a two-week high earlier in the session. Palladium rose 1.3% to $2,865.86, while platinum fell 0.1% to $1,184.98.

“The disappointing performance of the platinum price recently is also reflected in ETF demand. In contrast to gold, platinum has registered ETF outflows of late,” Commerzbank analyst Carsten Fritsch said in a note.

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