Gold climbs above $1,900

Bengaluru — Gold prices rose above the psychological level of $1,900/oz on Wednesday, helped by a weaker dollar and growing inflation concerns after Federal Reserve officials maintained a dovish stance over rates.

Spot gold rose 0.4% to $1,906.99/oz by 12.32am GMT, its highest level since January 8. US gold futures gained 0.5% to $1,906.60/oz.

“A weaker dollar is helping and growing inflation risks are outweighing everything right now. This is about hedge against inflation right now,” said Stephen Innes, managing partner at SPI Asset Management. “Even if inflation is high, they’re [the Fed] going to be very, very dovish. What really matters for gold is front end real rates. The Feds will continue to keep front-end rates low, which is going to weaken the dollar and gold is going to do quite well.”

The dollar index was pinned near a four-and-a-half-month low against its rivals, making gold cheaper for other currency holders.

Benchmark US treasury yields were hovering near a two-week low, reducing the opportunity cost of holding non-interest bearing gold. Gold, often used as a hedge against inflation, has benefited from recent data showing a rise in prices in the US and the UK.

Richard Clarida, the Fed’s vice-chair, said on Tuesday the US central bank can curb any possible outbreak of inflation without throwing economic recovery off track.

Meanwhile, US Senate Republicans plan to unveil a counter-offer to President Joe Biden’s $1.7-trillion infrastructure proposal on Thursday, though one of their leaders said on Tuesday the two sides remain far apart.

Elsewhere, palladium rose 1% to $2,797.89/oz, silver climbed 0.6% to $28.16 and platinum jumped 1.3% to $1,207.73.