Futures & Commodities

Gold gains as inflation woes persist, palladium extends rally

Key Points
  • All precious metals near two-month highs
  • Supply concerns likely driving autocatalysts' rally- Commerzbank
  • U.S. weekly jobless claims rose to 286,000
  • FOMC scheduled to meet on Jan. 25-26

In this article

A mark of 999.9 fine sits on hallmarked one kilogram gold bullion bars at the Valcambi SA precious metal refinery in Lugano, Switzerland, on April 24, 2018.
Stefan Wermuth | Bloomberg | Getty Images

Gold and silver touched two-month highs on Thursday, lifted by worries surrounding inflation and Russia-Ukraine tensions, while autocatalysts platinum and palladium extended the previous session's rally.

Spot gold rose 0.1% to $1,841.45 per ounce by 13:43 ET (1843 GMT), its highest since Nov. 22. U.S. gold futures settled flat at $1,842.60.

Silver rose 2.1% to $24.63.

The primary factor driving gold is inflation, which is boosting its appeal as a hedge against rising prices, said Daniel Pavilonis, senior market strategist at RJO Futures.

"The market looks like it wants to continue to move higher, and it's this self-fulfilling loop with more data coming out and showing that inflation is not transitory."

Data on Thursday showed the number of Americans filing new claims for unemployment benefits rose last week.

Reflecting investor appetite, holdings of the largest gold-backed exchange-traded fund, SPDR Gold Trust , jumped to their highest since mid-December.

Growing geopolitical instability, notably Russia-Ukraine tensions, is also supporting gold, ActivTrades senior analyst Ricardo Evangelista said.

Russia has massed troops on its borders with Ukraine, and Western states fear Moscow is planning a new assault.

However, rising interest rates remained a potential headwind since that translates into a higher opportunity cost of holding non-yielding bullion. The U.S. Federal Reserve could tighten monetary policy faster than expected when it meets next week, a Reuters poll showed.

Platinum rose 2.4% to $1,046.53 and palladium gained 3.6% to $2,072.62 per ounce, both having hit their highest in about two months. Palladium rallied over 7% on Wednesday, while platinum jumped 5%.

The rally could have been related to supply concerns due to the Russia-Ukraine tensions, Commerzbank said in a note, adding potential Western sanctions on key palladium producer Russia and an export ban on the metal vital for the automotive industry could lead to a severely under-supplied market.