Gold continues rising on inflationary concernsGold inched up on Wednesday trading to continue its rise for the third consecutive session to reach three-month high as the rise in inflation enhanced demand on the shiny metal as inflation hedge.
Spot gold is traded at $1375.75 an ounce after recording a high of $1376.19 and a low of $1370.60, where a daily closing above $1375.00 may push gold up to $1400.00.
Yesterday, Chinese inflation report, in spite of being lower than expectatioed, showed that CPI rose annually to 4.9% in January from 4.6% a year earlier, while in the UK CPI climbed to 4.0%, twice the bank's target, from 3.7% in December.
The rapid rise in UK inflation prompted King to send the first open letter this year to the Chancellor of the Exchequer to explain the reasons behind the rise.
King expects inflation levels to range between 4%-5% over the coming few months which raised expectations the BoE will raise interest rate soon before facing far-reaching calamity.
The previous session, gold added $11.30 or 0.83% to close at $1373.52, while gold price was setin London at $1372.25 per ounce declining from $1372.75 during the AM fixing.
Later in the day, the BoE will release February's inflation report which will include the updated outlook for growth and inflation. Also, US PPI in addition to housing, industrial production and FOMC minutes will be under scrutiny today.
Yet, monetary tightening by China and other central banks will probably affect growth outlook and thereby may help gold to rise further.
Actually, the main pillar of inflation is oil prices which advanced in the past few months to give uplift to gold prices. Crude oil for March delivery rebounded today to $84.75 a barrel from the day's opening level at $84.39, before the release of the EIA report at 15:30 GMT.
In Forex market, the US dollar slipped against a basket of major currencies, as depicted by the dollar index, to 78.30 compared with the day's starting level at 78.59.
Among other precious metals, platinum hovered around $1830.70, palladium edged up to $838.20 from the day's opening at $835.20 and silver rose to $30.80 from $30.69, as of 08:10 GMT.