Gold prices bounced on Wednesday as inflation worries pushed investors to the safe-haven metal, unfazed by the dollar's strength which was fuelled by bets for early interest hikes by the U.S. Federal Reserve.
Spot gold rose 0.9% to $1,866.83 per ounce by 12:46 p.m. ET (1746 GMT), having dropped in the previous two sessions after a seven-session rally.
U.S. gold futures gained 0.9% to $1,868.80.
"The underlying support for gold and silver remains the inflationary pressures we continue to see in the market," said David Meger, director of metals trading at High Ridge Futures.
The U.S. dollar - which also contends with gold as a safe store of value - touched its highest since July 2020, bolstered by better-than-expected U.S. retail data.
If Fed speakers, in the near term, signal asset purchase reductions may be speeded up to fight inflation or if the market believes rates would rise sooner than anticipated, bullion could come under some "light pressure," Meger said.
Higher interest rates increase the opportunity cost of holding non-interest bearing gold.
The Fed began phasing out its bond-buying this month and expects to end purchases altogether by mid-2022. Its next policy-setting meeting is in mid-December.
Rate hikes remain a potential risk for gold and only a clear break above $1,875 may drive further gains, Carlo Alberto De Casa, external analyst at Kinesis Money said.
Rising prices, driven mostly by soaring energy costs, remain a concern in other economies as well.
British inflation hit a 10-year high, bolstering expectations the Bank of England will raise interest rates in December, while Canada's annual rate accelerated again in October to match a February 2003 high.
Elsewhere, spot silver jumped 1.1% to $25.07 per ounce, platinum rose 0.1% to $1,062.17, and palladium climbed 1.2% to $2,185.44.