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Gold jumped to its highest in over a month on Thursday as the dollar and US Treasury yields retreated despite better-than-expected US economic data, pushing more investors to bullion as a refuge against possible inflation ahead.
Spot gold rose 1.7% to $1,766.13 per ounce by 11:07 a.m. EDT (1507 GMT), having earlier risen to $1,767.60, its highest since Feb. 26. US gold futures gained 1.8% to $1,767.10.
“A massive amount of inflation is certainly on the horizon and gold is just the best asset to own as we start to see what I would consider some historic levels of inflation,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.
“It is more of a weak dollar, strong economy, low interest rate dynamic that’s moving gold prices up,” Sica added.
Making gold more appealing for holders of other currencies, the dollar slumped to a four-week low, while retreating benchmark 10-year US Treasury yields further boosted bullion’s appeal.
Gold briefly pared gains after robust US data showed a better-than-expected rebound in retail sales in March, while weekly initial claims for state unemployment benefits dropped to the lowest level since mid-March 2020.
US Federal Reserve Chair Jerome Powell said on Wednesday US economy picked up speed going into the spring.
Powell and other Fed officials, however, say the brighter economic forecasts and brief period of higher inflation will not affect monetary policy and the central bank will keep its support in place until the crisis is over.
More price gains in the near term would better suggest a market bottom is in place for gold, Kitco Metals senior analyst Jim Wyckoff said in a note.
Silver gained 2% to $25.91 and palladium climbed 2.5% at $2,743.16, having earlier hit its highest since Feb. 28 at $2,760.53.
rose 2.6% to $1,200.47, having earlier risen as much as 2.8%.