Gold bars at Solar Capital Gold Zrt. in Budapest, Hungary, on March 10, 2016.
Akos Stiller | Bloomberg | Getty Images
Gold prices edged up on Tuesday, supported by latent inflation concerns, although gains were capped by a firm dollar and expectations that the US Federal Reserve will announce a cut in its bond purchases next month.
Spot gold rose 0.3% to $ 1,758.25 an ounce at 353 GMT, while US gold futures rose 0.1% to $ 1,758.20.
“Gold is relatively resilient and all arrows point to stagflation versus economic growth (debate),” said Stephen Innes, managing partner at SPI Asset Management.
However, investors are reluctant to continue the move higher before the September Fed meeting minutes, he said.
Limiting gold’s gains, the dollar hovered near a one-year high reached last month amid soaring energy prices and expectations that the Fed would soon begin to normalize its policy.
The benchmark 10-year US Treasury yield has peaked since early June.
Gold is often seen as a hedge against inflation, but the reduction in central bank stimulus and interest rate hikes tend to push up government bond yields, resulting in a higher opportunity cost for holding non-interest bearing bullion.
“The risks of slower growth in the face of higher inflation still call for a sustained strategic allocation to gold amid prevailing low rates,” ANZ Research analysts said in a note, adding that they expected bullion prices to hit $ 1,850 before retreating next year.
Meanwhile, inflation fears triggered by the global energy crisis and China Evergrande’s debt problems weighed on Asian stocks.
Market participants are now awaiting the minutes of the Fed’s September 21-22 policy meeting and the Consumer Price Index, both due later this week.
Spot silver rose 0.1% to $ 22.59 an ounce, while platinum rose 0.2% to $ 1,010.38.
Palladium fell 0.4% to $ 2,104.01, after hitting its highest level since September 10 at $ 2,182.67 on Monday.