Gold rises on fears of inflation dulling risk appetite

Gold rose on Tuesday as strong inflation fears weighed on investors’ appetite for risk, while a decline in US bond yields encouraged the attractiveness of bullion, a non-interest-bearing asset.

Spot gold was up 0.4% at $ 1,761.41 an ounce at 1159 GMT, while US gold futures were up 0.4% at $ 1,762.40 an ounce.

A global energy crisis is threatening the economic outlook and has fueled inflation fears, prompting some investors to seek safe haven assets.

“There is more risk aversion in the market and gold is benefiting from that, along with concerns about inflation and the cooling of the global economy.”Said Commerzbank analyst Daniel Briesemann.

If the ‘stagflation’ talks are coming to the fore, “that should help gold reach the $ 1,900 threshold by the end of the year, as interest rates should remain relatively low even if the Fed starts cutting its stimuli, ”added Briesemann, referring to the Federal Reserve’s bond purchase program.

Gold is traditionally seen as a hedge against inflation. However, reduced stimulus from central banks and increases in interest rates tend to boost government bond yields, which translates into a higher opportunity cost of holding bullion.

Market attention is focused this week on the minutes of the Fed’s monetary policy meeting on September 21-22 and the US consumer price index report, both scheduled for Wednesday.

Among other precious metals, silver added 0.1% to $ 22.58 an ounce; while platinum gained 0.1% to US $ 1,008.89 an ounce; and palladium was trading little changed at $ 2,112.91 an ounce.