Gold prices edged higher on Friday on safe haven buying, as global equities tumbled amid mounting worries about the global economy after World Bank warned of a global recession due to rising interest rates and monetary tightening by central banks.
The World Bank has warned that the world could face a recession next year amid simultaneous tightening of monetary policy by central banks.
World Bank economists warned that the actions may not be enough to bring high prices under control, leading to a need for more interest rate hikes, which in turn will put the brakes on growth.
The World Bank called for boosting production and removing supply bottlenecks to ease inflation.
Gold prices slipped earlier in the day on fears of harsher Fed policy.
The Fed is widely expected to raise interest rates by another 75 basis points, although some see an outside chance for a 100 basis point rate hike.
The dollar’s marginal uptick limited gold’s rise.
The dollar index, which rose to 110.26 in the Asian session, slipped below the flat line to 109.48 by late morning before edging up to 109.74, its previous closing level.
Gold futures for December ended higher by $6.20 or about 0.4% at $1,683.50 an ounce, recovering well from a low of $1,661.90 an ounce. Gold futures shed 2.6% in the week.
Silver futures for December ended higher by $0.112 at $19.381 an ounce, while Copper futures for December settled at $3.5165 per pound, gaining $0.0265.
A report from the University of Michigan showed a modest improvement in consumer sentiment and a decrease in inflation expectations.
The University of Michigan said its consumer sentiment index inched up to 59.5 in September from 58.2 in August. With the uptick, the consumer sentiment index reached its highest level since hitting 65.2 in April.
The report also showed the recent decline in energy prices has contributed to a decrease in inflation expectations.
One-year inflation expectations dipped to 4.6% in September from 4.8% in August, while five-year inflation expectations edged down to 2.8% from 2.9%.
The Fed has indicated that its aggressive monetary policy tightening partly reflects a desire to prevent elevated inflation expectations from becoming entrenched.
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