By Myra P. Saefong and Mark DeCambre
Gold futures climbed above $1,800 an ounce Monday, with concerns surrounding rising inflation helping prices mark their highest finish in more than six weeks.
“Real interest rates are as low as they have been since the beginning of the pandemic, which is supportive of gold as rising inflation expectations are outpacing the rise in benchmark interest rates,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.
“The trend higher in rates appears to be sustainable” but at some point, “inflation estimates should peak if price pressures are truly to be transitory,” he said. “In that situation, gold would likely top out and rollover as the combination of upward trending interest rates and a stronger dollar offset lofty but steady inflation expectations.”
Against that backdrop, December gold /zigman2/quotes/210039437/delayed GCZ21 -1.01% /zigman2/quotes/210034565/delayed GC00 -1.06% climbed $10.50, or 0.6%, to settle at $1,806.80 an ounce, with prices for the most active contract ending at their highest since Sept. 14, according to FactSet data.
Gold scored a 1.6% weekly climb on Friday, marking the fourth weekly advance in five weeks, according to Dow Jones Market Data, and the sharpest such rise for a most-active contract since the period ended Aug. 27.
Gold also posted a climb for Friday’s trading session , though ended below the day’s best levels, after remarks from Federal Reserve Chairman Jerome Powell raised the likelihood that the central bank will soon start to slow, or taper, its monthly bond purchases.
The yellow metal climbed Monday, supported in part by a pull back in Treasury yields from multimonth highs, though bullishness appeared capped by a modest rise in the U.S. dollar.
Still, gold bulls make the case that the dollar has been tracking lower in recent days after hitting a peak earlier this month, paving the way for dollar-pegged assets to advance.
“The U.S. dollar has been retreating from the yearly highs reached earlier in October, as markets adjust to the spreading of inflation-related fears across the globe, which means that the same forces that supported the U.S. dollar earlier in the year are now propelling other currencies to fresh highs, a dynamic that penalizes the dollar and therefore supports gold,” wrote Ricardo Evangelista, senior analyst at ActivTrades in a Monday note.
The dollar, as measured by the ICE U.S. Dollar index /zigman2/quotes/210598269/delayed DXY +0.06% , was up 0.2% in Monday dealings, but traded around 0.4% lower for the month.
Meanwhile, December silver /zigman2/quotes/210319421/delayed SIZ21 -0.06% /zigman2/quotes/210315219/delayed SI00 +0.12% climbed by 14 cents, or 0.6%, at $24.592 an ounce, after logging a 4.7% weekly climb, which was the sharpest weekly climb since May 7.
Among other metals traded on Comex, December copper /zigman2/quotes/210059552/delayed HGZ21 +1.32% tacked on 0.7% to $4.528 a pound. January platinum /zigman2/quotes/222209103/delayed PLF22 -0.46% added 1.1% to $1,063.80 an ounce and December palladium /zigman2/quotes/221433715/delayed PAZ21 -0.43% rose 0.6% to $2,048.20 an ounce.