(Bloomberg) -- Gold held onto its worst daily loss since the end of November as investors weighed the latest U.S. inflation data and counted down to the conclusion of the final Federal Reserve meeting of the year later Wednesday.
Prices paid to U.S. producers posted a record annual increase of almost 10% in November, a surge that will sustain a pipeline of inflationary pressures well into 2022. This is boosting the case for the Fed to tighten monetary policy, which is weighing on non-interest bearing assets such as precious metals.
Fed policy makers could announce a doubling of the pace of its bond-buying taper and lay out a steeper path of expected interest rate hikes, according to Bloomberg Economics.
Bullion is heading for its first annual loss in three years amid diminishing monetary support from central banks, although uncertainties surrounding the impact of the new virus variant could stoke demand for haven assets. The World Health Organization is concerned that omicron is being dismissed as mild, even as it spreads at a faster rate than any previous strain of Covid-19.
Spot gold rose 0.1% to $1,773.18 an ounce by 9:02 a.m. in Singapore after dropping 0.9% Tuesday. The Bloomberg Dollar Spot Index eased 0.1% after advancing 0.3% in the previous session. Silver climbed, platinum was flat and palladium traded near the lowest level since March 2020.
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