The Dollar lost 1% as investors maintained selling pressurecutting bets on further greenback gains from rising US interest rates. A weaker dollar makes gold cheaper for foreign buyers.
“Gold is buoyed by dollar weakness, concerns about accelerating inflation and global growth fears… In the short term, a weaker dollar could provide the precious metal with a tailwind, lifting prices beyond the 200-day simple moving average,” said Lukman Otunuga, analyst at FXTM.
“Although gold appears to be pushing higher, the Fed’s aggressive approach to high interest rates could act as a major headwind for the zero-yield metal,” he added.
Gold is considered a hedge against inflation and a safe haven in times of economic turmoil. However, it is very rate sensitive as it does not accrue interest.
ANZ Research said in a note that the growing risk of stock markets underperforming is reinforcing gold’s appeal as a risk diversifier.
In other precious metals, spot silver was up 1.7% at $22.11 an ounce; platinum rose 1.8% to $972.57; and palladium was up 3.2% at $2,026.56.
By Ashitha Shivaprasad, Reuters agency
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Source: Ambito

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