Gold up 1.5% on inflation concerns, softer dollar

GOLD rose more than 1.5% to a near one-week high on Monday, as expectations for rising inflation triggered equity valuation concerns and drove investors toward the safe-haven metal, while a weaker US dollar lent further support.

Spot gold was up 1.5% at $1,808.16 an ounce by 1:46 p.m. EST (1846 GMT), after hitting its highest level since Feb. 16 in the session.

US gold futures settled up 1.7% at $1,808.40.

US benchmark 10-year treasury yields hit a near one-year high, increasing the opportunity cost of holding non-yielding bullion.

However, rising real yields and inflation concerns made equity valuations look more stretched in comparison and prompted investors toward safe-haven assets like gold, which is widely viewed as a hedge against inflation.

The dollar index fell 0.4% to a more than one-month low, making gold less expensive for holders of other currencies.

A $1.9-trillion US stimulus package is widely expected to pass by the end of the week, raising hopes of a speedy economic recovery but at the cost of rising inflation.

Investors are also eyeing the testimony of US Federal Reserve Chairman Jerome Powell on the Semiannual Monetary Report to Congress on Tuesday. The Fed and other leading central banks have pinned their hopes on ultralow interest rates to get the economy out of the economic fallout from the COVID-19 pandemic.

Elsewhere, silver rose 3% to $28.02 an ounce, its highest level since Feb. 2. Platinum edged 0.1% higher to $1,274.80.

Palladium gained 0.4% to $2,388.70, after reaching a more than one-month high of $2,431.50.