Gold steady as rate-hike fears counter softer dollar

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Nov 18 (Reuters) – Gold prices held steady on Thursday, as uncertainty over the pace at which central banks would eventually need to hike interest rates to curb rising inflation countered support from a softer dollar.

Spot gold was little changed at $1,865.95 per ounce by 0502 GMT. U.S. gold futures dropped 0.1% to $1,868.70.

Bullion prices had scaled their highest in more than five months on Tuesday amid increasing worries about higher inflation. Data showed British inflation hit a 10-year high last month and U.S. consumer prices accelerated in October.

Rising inflation has also bolstered bets of an interest rate hike by the Bank of England in December and the U.S. Federal Reserve next year.

“The gold market is positioned for the Fed to do something now, but the big question is will they accelerate taper plans?” said Stephen Innes, managing partner at SPI Asset Management.

“Until the Fed actually signals an accelerated taper, gold should hold its current $1,850 and $1,875 range with the potential appointment of Lael Brainard as the new Fed Chair, who is considered a super dove, likely to push it above $1,870.”

U.S. President Joe Biden will likely decide whether to keep current Fed Chairman Jerome Powell for a second term or promote Fed Governor Lael Brainard to the post before Thanksgiving, a White House spokesperson said on Wednesday.

Gold is often viewed as a hedge against inflation but higher interest rates raise the non-interest bearing metal’s opportunity cost.

Lending support to gold was a weaker dollar, which reduces bullion’s cost to buyers holding other currencies.

Spot silver fell 0.2% to $24.99 per ounce.

Global silver demand will rise to 1.029 billion ounces this year, exceeding a billion ounces for the first time since 2015, the Silver Institute said in a report.

Platinum rose 0.2% to $1,059.45 while palladium gained 0.1% to $2,190.21.

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