Gold scales 1-month peak as inflation angst bolsters appeal

Gold prices hit a one-month high on Wednesday, driven by demand for a hedge against soaring inflation amid the Russia-Ukraine war, easing pressure from expectations of an aggressive U.S. interest rate hike and a robust dollar

Spot gold rose 0.5% to $1,977.07 per ounce by 10:30 a.m. ET, after touching its highest since March 14 at $1,979.95 U.S. gold futureswere up 0.2% at $1,980.70

Gold seems to be “ignoring the stronger dollar and rising U.S. rates and they seem to be singularly focused on inflation,” said Edward Meir, an analyst with ED&F Man Capital Markets

Data showed on Tuesday that U.S. monthly consumer prices surged in March, cementing the case for a 50 basis point interest rate hike from the Federal Reserve next month as it seeks to tackle inflation

Gold is considered a hedge against inflation and geopolitical risks. However, rising U.S. interest rates would raise the opportunity cost of holding non-yielding bullion and boost the greenback in which it is priced

The dollar index touched a two-year high during the session buoyed by hawkish comments by Fed officials

“We’re importing inflation here,” said Daniel Pavilonis, senior market strategist at RJO Futures, adding there is “real scare of more inflation coming from the lack of exports, the lack of shipments and back orders and all the other shipping costs” due to the Ukriane crisis

President Vladimir Putin said on Tuesday peace talks with Ukraine had hit a dead end signaling the war could grind on for longer

Spot silver rose 1.2% to $25.66 per ounce, platinum gained 1% to $975.28, and palladium was up 1.2% to $2,354.63