Gold climbed to its highest in four months on Wednesday as bond yields slipped and equity markets tumbled on rising inflation concerns, boosting demand for the safe haven metal.
Spot gold rose as much as 1.1% to $1,890.13 an ounce, the highest since the first week of January, before trading at $1,883.41 at 11:50 p.m. ET. US gold futures also gained 0.9%, trading at $1,885.70 an ounce in New York.
[Click here for an interactive chart of gold prices]
Meanwhile, US equities fell on concern about faster inflation and covid-19 flareups in some nations. Technology stocks extended a slide as Bitcoin’s plunge sent cryptocurrency-linked assets lower.
Yields on 10-year treasuries were steady after giving up early gains, while the US dollar index held close to a near three-month low, making gold more attractive for holders of other currencies.
Gold has been buoyed by the combination of falling real bond yields and a weakening dollar, with inflation expectations rising in the US.
That has revived investor interest in bullion, which is seen as a hedge against inflation, with holdings in gold-backed exchange-traded funds rebounding over the past few weeks.
Gold prices have risen about $190 – or more than 11% – after falling to a nine-month low in early March.
“It’s flight to safety, that’s helping gold,” Bob Haberkorn, senior market strategist at RJO Futures, told Bloomberg.
“Bitcoin is down – it feels that the safety trade that was in crypto is probably coming to gold this morning. Equities are also down,” he added.
Investors are now awaiting the Federal Reserve minutes due later in the day, which may offer more insight into how US policy makers view growing price pressures.
“Gold surged aggressively since the start of the week around the narrative that we could see inflation pick-up in an environment where the Fed is resistant to tightening,” DailyFX currency strategist Ilya Spivak told Reuters.
(With files from Bloomberg and Reuters)