LONDON – Gold hovered near its two-month highs on Friday as inflation and geopolitical risks underpinned the safe-haven metal, while strong demand for palladium set the autocatalyst on course for its best week since March.
Spot gold eased 0.2% to $1,835.13 per ounce as of 10:11 GMT. US gold futures fell 0.4% to $1,835.40.
“The sentiment remains positive despite the modest correction (in gold) seen this morning. From a technical point of view, the current decline can be called a pullback, a test to the former resistance zone of $1,830,” said Carlo Alberto De Casa, market analyst at Kinesis.
Gold has risen about 0.9% this week after prices climbed to a two-month high of $1,847.72 as benchmark US 10-year Treasury yields retreated.
Investor focus is now on the US Federal Reserve’s policy meeting scheduled on Jan. 25-26 as it plans to hike interest rates to fight inflation.
“Apart from inflation concerns, gold prices are benefiting from rising geopolitical tensions, which support safe-haven investment demand,” said ANZ analyst Soni Kumari according to Reuters.
Fears that Russia may invade its neighbour Ukraine have kept investors on the tenterhooks.
While gold is an inflationary hedge, it is also sensitive to rising US interest rates, which reduce the appeal of holding non-interest-bearing bullion.
Spot palladium jumped 0.8% to $2,075.68 per ounce, poised for a weekly gain of more than 10%. Platinum was up 0.1% at $1,040.40, set for its best week since last June.
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