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Gold hit a five-month high on Wednesday, leading a rally in precious metals, as data showed U.S. consumer prices surged last month, burnishing bullion’s appeal as an inflation hedge.

·         Spot gold was up 0.7% at $1,843.31 per ounce by 13:45 p.m. ET (1845 GMT), after hitting its highest since June 15 at $1,868.20 earlier in the session.

·         U.S. gold futures settled 1% higher at $1,848.3.

 

·         “Once again we have hot inflationary data,” said David Meger, director of metals trading at High Ridge Futures. “Gold being the quintessential hedge against inflation, we believe inflation is the underlying positive environment that will foster the gold market rally in the weeks and months ahead.”

 

“This environment is a double-edged sword because as inflationary data continues to come out hotter than expected, the concern will be whether the Federal Reserve reduces liquidity faster than anticipated,” Meger said.

 

·         Latching onto gold’s coattails, spot silver rose 1.3% to $24.59, platinum added 0.7% to $1,066.05 and palladium gained 0.4% at $2,028.44.

 

·         The rally looked past strength in the U.S. dollar, which usually dulls gold demand from other currency holders, for much of the session, but finally buckled to give up a chunk of the gains as the greenback hit its highest in over a year.

 

·         Safe-haven gold, on course for a fifth straight day of gains, also drew support from a slide in real yields on U.S. Treasuries and the overall risk-off sentiment that pushed down Wall Street’s main indexes.

 

·         Its break above the key resistance level of $1,835 per ounce is important and a close above the $1,851 mark could ignite upward momentum towards $1,900, said Standard Chartered analyst Suki Cooper.

 

“Gold has a solid floor to build price momentum from given the seasonally strong demand from India,” she said.

 

·         US jobless claims drop to pandemic low of 267,000

In another report on Wednesday, the Labor Department said initial claims for state unemployment benefits fell 4,000 to a seasonally adjusted 267,000 for the week ended Nov. 6.

That was the lowest level since the middle of March in 2020, when the economy almost ground to a halt under the onslaught of mandatory business closures aimed at slowing the first wave of COVID-19 infections.

Claims, which have now dropped for six straight weeks, are within striking distance of their pre-pandemic level.

 

·         Surging gasoline, food prices fan U.S. inflation, leading to the biggest annual gain in 31 years.

U.S. consumer prices accelerated in October as Americans paid more for gasoline and food, leading to the biggest annual gain in 31 years, more signs that inflation could stay uncomfortably high well into 2022 amid snarled global supply chains.

Inflation pressures are also brewing in the labor market, where an acute shortage of workers is driving wages higher. The number of Americans filing claims for unemployment benefits fell to a 20-month low last week, other data showed on Wednesday.

 

·         Economists expect the Fed to start raising interest rates in late 2022.

 

·         Dollar climbs with rate hike speculation raging on U.S. inflation surge

 

·         Dow drops 240 points, Nasdaq falls 1.7% after hot inflation data drives bond yield spike

 

·         Fed's Daly: Inflation will moderate, uncertainty requires us to wait

San Francisco Federal Reserve Bank President Mary Daly on Wednesday said she expects high inflation to moderate once COVID-19 recedes, and repeated that it would be “quite premature” to raise rates now or even to speed up the Fed’s bond-buying taper.

 

·         Higher inflation may drive Fed to ‘shift game plan,’ former Obama top economist says

Jason Furman, Aetna professor of the practice of economic policy at the Harvard Kennedy School & Harvard University, discusses his outlook for the U.S. economy and the Federal Reserve’s path of rate hikes. He speaks with CNBC’s Julianna Tatelbaum on the sidelines of the UBS European Conference.

 

·         Biden to sign $1 trillion infrastructure bill on Monday

·         Biden says prices are too high in trip touting efforts to combat inflation

U.S. President Joe Biden aimed to showcase his inflation-taming efforts in a visit to Baltimore on Wednesday, saying prices at stores nationwide are simply too high as inflation hit a level not seen for more than 30 years.

The Labor Department on Wednesday reported that U.S. consumer prices accelerated 6.2% in the 12 months through October, marking the largest year-on-year jump since November 1990.

The carefully chosen backdrop for Biden’s visit was the Port of Baltimore, one of the nation’s busiest.

 

 ·         Xi says China is ready to work with U.S. on condition of ‘mutual respect’

 

·         China, U.S. pledge to boost cooperation on climate efforts

 

·         U.S. and China unveil deal to ramp up cooperation on climate change

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