Gold Holds Biggest Gain Since March on Persistent High Inflation

(Bloomberg) — Gold edged higher on a weaker dollar after its biggest advance in seven months as investors weighed concerns around stubbornly high inflation and the looming reduction in stimulus.

Most Read from Bloomberg

What Comes After GE’s 129 Years of Greenhouse Gas
What the Front Line of the U.S. Abortion Fight in Kentucky Looks Like Now
Argentina’s 120-Year-Old Cattle Auction Is Leaving Buenos Aires

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.

“Real interest rates fell and that supported gold,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “There is a rising perception in the market that inflation could stay elevated for longer.”

Data Thursday showed China’s factory-gate prices grew at the fastest pace in almost 26 years last month, adding to global inflation risks. The U.S. producer price index is due later Thursday.

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.

“The minutes contained nothing new,” Daniel Briesemann, an analyst at Commerzbank AG, wrote in a note. The bank expects tapering to be announced at the next meeting early in November, he said.

Spot gold added 0.3% to $1,798.12 an ounce at 11:05 a.m., its highest in four weeks. The Bloomberg Dollar Spot Index weakened 0.2% after dropping 0.5% in the previous session. Silver, platinum and palladium all advanced.