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Gold futures rallied Wednesday, settling at their highest since June, as data showing the U.S. rate of inflation at its highest in three decades lifted prices for bullion for a fifth-consecutive session.
The cost of living rose sharply again in October, with the consumer-price index up 0.9% last month, the government said Wednesday. The pace of inflation over the past year marched to 6.2% in October — the highest rate since November 1990.
Gold is a “perfect inflation hedge” and prices for the metal have made “massive upward moves” in the wake of the data, said Naeem Aslam, chief market analyst at AvaTrade, in a market update. “This is despite the fact that the dollar index is up, as traders believe that the [Federal Reserve] is behind the curve and they need to do something to control the pace of inflation.”
The dollar was up 0.9% at 94.781, as gauged by the ICE U.S. Dollar Index
DXY,
a measure of the buck against a half-dozen currencies. Strength in the dollar often pressures prices for dollar-denominated gold.
U.S. benchmark stock indexes, however, traded broadly lower, providing support for haven gold since “inflation isn’t the best news” that the market needs ahead of the holiday season, said Aslam.
December gold
GCZ21,
GC00,
rose $17.50, or 1%, to settle at $1,848.30 an ounce, with prices notching a fifth straight session rise, the longest run since a five-day rise ended July 7, according to Dow Jones Market Data. Prices settled at their highest since June 16.
Read: Why surging U.S. inflation has gold bulls looking for record highs
Silver for December delivery
SIZ21,
SI00,
tacked on 45 cents, or 1.9%, to $24.772 an ounce, with prices posting their highest most-active contract finish since early September.
The rise in inflation has been supported by the “significant increase in wages and supply-chain disruptions, particularly linked to the transportation sector,” said Juan Carlos Artigas, global head of research at the World Gold Council.
“As we look forward, we believe that there is a considerable risk that higher inflation may persist as a by-product of knock-on effects from the monetary and fiscal policies put in place as a response to the COVID-19 pandemic,” he told MarketWatch, in emailed comments. “This, in turn, should support investment demand for gold as inflation hedge.”
Among other metals traded on Comex, December copper
HGZ21,
declined by 1.1% to $4.323 a pound. January platinum
PLF22,
added 1.5% to $1,077 an ounce and December palladium
PAZ21,
settled at $2,038.90 an ounce, up 0.8%.
