Gold futures headed higher on Friday, with bullion on track for the sharpest weekly gain since May, as investors turned to precious metals amid growing concerns that rising inflation in the aftermath of COVID-19 may erode purchasing power.
Gold and silver are “supported by increasing worries about problematic price inflation and by a lower U.S. dollar index to end the trading week,” said Jim Wyckoff, senior analyst at Kitco.com, in a daily note. Gold is often perceived as a hedge against rising inflation.
The markets for both gold and silver have “finally awakened to the fact global inflation is rising and probably won’t be just transitory,” said Wyckoff. “Gold prices have been trending higher since late-September and silver prices this week hit a six-week high.”
“History shows hard assets like the precious metals become more in favor as an inflation hedge when consumer and producer prices are rising,” he said.
December gold GCZ21,
December silver SIZ21,
Investors are watching for comments from Federal Reserve Chairman Jerome Powell later Friday, which will be the final comments from the central banker this month before a November policy meeting which is expected to mark the start of tapering of monthly purchases of Treasurys and mortgage-backed securities.
The expected reduction in asset purchases, which has been supportive of healthy financial conditions, have been driving yields higher, weighing on bullion buying.
Gold’s value has been somewhat rangebound since July as a result of concerns about global growth and inflation, which are bullish for the yellow metal, and rising yields, which can undercut the appeal of non-yielding precious metals.
On Friday, Treasury yields moved lower, with 10-year Treasury note yields TMUBMUSD10Y,
Those moves followed data Friday from IHS Markit that showed a survey of senior business executives in service-oriented companies rebounded to a three-month high of 58.2 this month from 54.9 in September.
Among other Comex-traded metals. December copper HGZ21,
January platinum PLF22,
