Yellow metal prices fell in London on Friday but were set to rise for the biggest weekly gain in six months due to concerns about high inflation in the U.S.
Gold futures were down 0.32% at $1,858 an ounce when this post went to press, but were still on track for their best week since May 7. On Friday, the dollar rose to its highest since July 2020, which normally moves inversely to gold.
It’s important to remember that gold moves in the opposite direction of riskier assets, typically global equities. When economic uncertainty is high, investors typically turn to gold. Gold is an important store of value. Inflation is one of the main reasons for investing in gold.
In October, inflation in the U.S. reached three-decade highs with a 6.2% annual increase and a 0.9% month-over-month rise in the consumer price index (CPI). CPI rose 4.6% on a year-over-year basis and 0.6% on a month-over-month basis.
The Federal Reserve’s insistence that inflationary pressures are temporary was also challenged by rising inflation, which boosted speculation that interest rates will be raised earlier than expected.
Gold’s appeal will decrease if central banks hike interest rates, even though easy monetary policy has given it a boost.
Europe’s GDP rose 1.3% quarter-on-quarter in the third quarter, data released on Thursday showed. Year over year, the GDP rose 6.6%, while month over month, it rose 0.6%. With slower growth, the focus has been on the Bank of England’s next move regarding interest rate hikes. Surprised by its own move, the BOE kept its interest rate steady at 0.10%.
Other precious metals rose, with silver up 0.1% to $25.25 per ounce. It was set to have its best week in three weeks. The price of platinum was little changed at $1,085.52, but it is expected to rise for the biggest weekly gain in a month. Palladium gained 0.2%.
