By Kavya Guduru
(Reuters) – Gold inched up in choppy trade on Wednesday as concerns over economic growth boosted the metal’s safe-haven appeal ahead of U.S. inflation data that could guide the Federal Reserve’s rate hike timeline.
Spot gold rose 0.1% to $1,853.82 per ounce by 2:29 p.m. EDT (1829 GMT). U.S. gold futures settled up 0.2% at $1,856.50.
“We’re seeing this push-pull mentality in the gold market… Now the focus is going to be on Friday’s CPI data to see if inflation has in fact started to pull back a bit or continues to run hotter than expected,” said David Meger, director of metals trading at High Ridge Futures.
Gold faces headwinds from a Fed that is now seemingly committed to fighting soaring inflation, Meger said.
U.S. Treasury Secretary Janet Yellen said the current annual inflation rate of 8% is “unacceptable” for the United States and a 2% inflation target is an “appropriate target” for the Fed.
Although seen as an inflation hedge, gold is sensitive to interest rate hikes which increase the opportunity cost of holding non-yielding bullion.
Gold was also benefiting from some safe-haven flows driven by increased economic growth concerns amid deteriorating risk appetite, said Edward Moya, senior analyst with OANDA.
Gold’s latest uptick came despite a rise in U.S. Treasury yields and a relatively firm dollar. [US/] [USD/]
On the physical front, however, consultants Metals Focus said gold demand will dip this year amid weaker jewellery sales and retail investment in China due to COVID-19 lockdowns and an economic slowdown.[GOL/AS]
Elsewhere, silver fell 0.7% to $22.06 per ounce, platinum was down 0.5% at $1,006.18 and palladium shed 1.9% to $1,946.03.
(Reporting by Kavya Guduru in Bengaluru; Editing by Marguerita Choy and Devika Syamnath)
