Gold Holds Biggest Gain Since March on Persistent High Inflation


Gold steadied after its biggest advance in seven months as investors weighed concerns around stubbornly high inflation and the looming reduction in stimulus.

The U.S. consumer price index rose in September by more than forecast, resuming a faster pace of growth and underscoring the persistence of inflationary pressures in the economy. The yield on 10-year Treasuries fell after an initial increase following the data released Wednesday, boosting demand for non-interest-bearing bullion. Data Thursday showed China’s factory-gate prices grew at the fastest pace in almost 26 years last month, adding to global inflation risks.

Meanwhile, minutes of last month’s Federal Reserve meeting showed that officials broadly agreed they should start tapering bond purchases in mid-November or mid-December amid increasing concern over inflation. The pandemic-era stimulus measures were one of the key pillars in bullion’s rally to a record last year.

“Gold might actually start catching a strong bid if high inflation persists, which is a big switch from earlier in the year where taper fears dominated inflation fears,” said John Feeney, business development manager at Sydney-based bullion dealer Guardian Gold Australia. “Historically, gold tends to perform very well in inflationary environments, so it makes sense for the market to turn bullish if inflation continues to beat.”

Spot gold fell 0.2% to $1,789.06 an ounce at 12:17 p.m. in Singapore, after advancing 1.9% Wednesday, the most since March 9. The Bloomberg Dollar Spot Index was little changed after dropping 0.5% in the previous session. Silver, platinum and palladium were all slightly lower.