Gold steadies as traders weigh elevated inflation, growth risks

Gold steadied as investors weighed concerns over inflation, fueled by a surge in energy and metal prices that threatens to derail the economic recovery.

Focus will turn to the US on Wednesday, where consumer price index data are expected to show price pressures remained elevated last month. And while minutes from the Federal Reserve’s September meeting are likely to signal an imminent scaling back of asset purchases, the latest miss on jobs data may complicate the timing of when tapering could start.

Meanwhile, Goldman Sachs Group economists have cut forecasts for US growth this year and next, blaming a delayed recovery in consumer spending.

That could mean the Fed takes its time to raise interest rates, according to Goldman’s chief economist Jan Hatzius. Delays in rate increases could benefit gold, as it doesn’t offer interest.

“Inflation pressures are not going away anytime soon and that should keep Treasury yields rising, which is bad news for non-interest-bearing gold in the short-term,” said Edward Moya, a senior market analyst at Oanda Corp. “Investors may soon start to turn bullish on bullion once worries intensify that the 2022 global outlook will deteriorate even further.”

Spot gold steadied at $1,755.18 an ounce at 9.40am in Singapore, after retreating 0.2 per cent on Monday. The Bloomberg Dollar Spot Index was little changed after rising 0.3 per cent in the previous session. Silver and platinum dropped, while palladium fell 0.2 per cent after advancing for three straight days.