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Gold Rises as Dollar Dips, Faster Taper Jitters Cap Gains

  • Gold still has recovery potential on high inflation - analyst
  • U.S. jobless claims hit 52-year low

Nov 25 (Reuters) - Gold prices edged up on Thursday and were set to break a five-session losing streak after the dollar eased, but expectations for faster tapering of asset purchases in the United States to tame rising price pressure clipped bullion's gains.

Spot gold rose 0.2% to $1,792.20 per ounce by 0912 GMT, after slipping to its lowest since Nov. 4 on Wednesday. U.S. gold futures gained 0.5% to $1,794.00.

"Gold still has some recovery potential on anticipation of high inflation figures. But essentially, with the Federal Reserve pursuing the ongoing tapering, that should push up real rates at a later stage," UBS Analyst Giovanni Staunovo said, adding that prices are hence expected to remain volatile.

The most important driver for gold's outlook, therefore, is the Fed, Staunovo said.

Bullion is often touted as a protection against rising inflation, but reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of gold, which pays no interest.

A growing number of Federal Reserve policymakers indicated they would be open to speeding up the elimination of their bond-buying program if high inflation held and move more quickly to raise interest rates, minutes of the U.S. central bank's last policy meeting showed.

In the wake of Wednesday's U.S. economic data for jobless claims, personal spending, and inflation, "can only expect this nervousness to rise, and the calls for a faster taper to increase" when the Fed next meets next on Dec. 14-15, said CMC Markets UK's chief market analyst Michael Hewson in a note. 

Offering some support to bullion on Thursday, the dollar index eased off from an over 16-month high hit in the previous session.

Spot silver rose 0.3% to $23.60 per ounce, platinum gained 1.9% to $992.55, and palladium advanced 1.9% to $1,886.16.

Reporting by Arundhati Sarkar in Bengaluru; editing by Uttaresh.V

Source: Reuters

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