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Gold gains as metals rally sparks inflation concerns

Inflation fears boost gold, which is seen as a safe haven against rising prices.

business Updated: Apr 19, 2018 13:54 IST
Spot gold faces a resistance at $1,356 per ounce, a break above which could lead to a gain to $1,365.23, said Reuters technical analyst Wang Tao.
Spot gold faces a resistance at $1,356 per ounce, a break above which could lead to a gain to $1,365.23, said Reuters technical analyst Wang Tao.(Alex Kraus/Bloomberg)

Gold prices rose for a fourth straight session helped by a rally in base metals that has fuelled concerns of inflationary pressures, with lingering US - China trade tensions lending further support to the yellow metal.

Spot gold was up 0.2% to $1,351.51 per ounce at 0441 GMT, a day after it touched a one-week high of $1355.74.

US gold futures rose 0.1% to $1,354.50 per ounce.

“Gold shot up in glittering fashion on haven demand while catching a fillip from the underlying move in commodity prices,” said Stephen Innes, head of trading for Asia-Pacific for OANDA in Singapore.

Resources stocks surged in Asia on Thursday as oil prices climbed to their highest in over three years. Aluminium prices reached their highest since 2011, alumina touched an all-time peak and nickel jumped the most in 6-and-a-half years.

“With base metals rallying quite strongly it could lead to higher inflation... Gold could be used as a hedge against inflation risk,” said OCBC analyst Barnabas Gan.

Inflation fears boost gold, which is seen as a safe haven against rising prices.

“Other important point to note is that the tariff threats being imposed by both Trump and China has not been taken off the table... If trade tensions escalate further gold prices could go up to $1,600 per ounce,” Gan added.

The Chinese commerce ministry said on Thursday China is well prepared to handle any negative effects from its trade dispute with the United States, and that the US would be making a miscalculation if it is determined to contain China’s rise.

Spot gold faces a resistance at $1,356 per ounce, a break above which could lead to a gain to $1,365.23, said Reuters technical analyst Wang Tao.

Meanwhile, spot silver rose 0.5% to $17.23 per ounce. Prices had hit $17.26, their highest since February 1, in the previous session.

Platinum climbed 1.1% to $945.80 per ounce. It had touched a three-week high of $948.70 on Wednesday.

Palladium was up 0.1% at $1,036.08 per ounce.