Views Article – Sharenet Wealth

Europe, News

Gold steadies but Fed’s hawkish stance limits advance

(Updates prices)

* Bullion still has recovery potential on high inflation – analyst

* Gold set to snap 5-day losing streak

By Arundhati Sarkar

Nov 25 (Reuters) – Gold prices edged up on Thursday buoyed by persistent inflation concerns, with further gains in bullion clipped by expectations that the Federal Reserve may hasten its monetary tightening to tame rising prices.

Spot gold rose 0.12% to $1,790.70 per ounce by 1250 GMT, recovering some ground after slipping to its lowest since Nov. 4 on Wednesday. U.S. gold futures gained 0.4% to $1,791.40.

Trading is likely to be thinned by the U.S. Thanksgiving holiday.

“Gold still has some recovery potential on anticipation of high inflation figures. But essentially, with the Fed pursuing the ongoing tapering, that should push up real rates at a later stage,” keeping prices volatile, said UBS analyst Giovanni Staunovo.

Although bullion is considered a hedge against rising inflation, interest rate hikes tend to push government bond yields up and thereby raise the opportunity cost of holding gold.

A growing number of Fed policymakers indicated they would be open to speeding up the elimination of their bond-buying program if high inflation held and move more quickly to raise interest rates, minutes of the central bank’s last policy meeting showed.

In the wake of Wednesday’s strong economic data from the U.S., including a sharp drop in weekly jobless claims, calls for a faster taper are expected to rise when the Fed meets next on Dec. 14-15, said CMC Markets UK’s chief market analyst Michael Hewson in a note.

Gold also tracked moves in the dollar index, which eased off an over 16-month high.

“The prevailing sentiment is that the price of gold will be facing some headwinds,” and bullion could face significant resistance around the $1,800 – $1,810 levels, said Ricardo Evangelista, senior analyst at ActivTrades.

Spot silver rose 0.4% to $23.62 per ounce, platinum gained 1.6% to $989.78, and palladium advanced 1.5% to $1,879.18. (Reporting by Arundhati Sarkar in Bengaluru; Editing by Uttaresh.V, Shailesh Kuber and Diane Craft)

© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.