Gold flat as investors weigh inflation, rate-hike prospects

Silver heads for first weekly fall in three
Gold could trade between $1,835-$1,880/oz near-term – analyst
Swiss gold exports to mainland China rose in October – data

Nov 19 (Reuters) – Gold prices were flat on Friday, as traders were caught between concerns over broadening inflationary risks and the prospects of quicker interest rate hikes, which challenged bullion’s appeal as an inflation hedge.

Spot gold was steady at $1,857.87 per ounce by 0715 GMT. U.S. gold futures gained 0.1% to $1,859.80.

Gold scaled its highest level in more than five months earlier this week as an acceleration in U.S. consumer prices last month heightened concerns that inflation could stay uncomfortably high well into 2022. read more

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“While elevated inflation has enticed strong buying interest in gold, expectations of policy normalization by the U.S. Fed and other major central banks amid a sharp recovery in growth remains the key headwind for the metal,” said Sugandha Sachdeva, vice president of commodity & currency research at Religare Broking.

“Gold prices are likely to consolidate in a range between $1,835 and $1,880 in the short-term. But in the long term, the metal is likely to witness buying interest at lower levels and if prices nudge past $1,880, it could surge to $1,920.”

Federal Reserve policymakers are pencilling in the possibility of earlier interest rate hikes than they thought would be needed just a few months ago. read more

Higher interest rates raise the non-interest-bearing gold’s opportunity cost, reducing the metal’s appeal.

“The focus on rate hikes and their impact on inflation makes gold’s near-term price action very sensitive to economic data like next week’s personal consumption expenditures (PCE),” DailyFX currency strategist Ilya Spivak said.

Market participants also took stock of data showing Swiss gold exports to mainland China increased in October, while shipments to India fell slightly from September.

Spot silver rose 0.2% to $24.83 an ounce, but was on track for its first weekly fall in three.

Platinum gained 0.5% to $1,053.15 and palladium edged up 0.1% to $2,135.16.