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Gold Price Slips as Oil Jumps Again, US-UK Split from Eurozone Over The 'Inflation Thing'

GOLD PRICES edged lower on Monday while US oil prices rose to 7-year highs, bond-market traders said they expect Fed tapering to begin next month, and a Bank of England policymaker warned of a "significantly earlier" rate rise in the UK, writes Atsuko Whitehouse at BullionVault.
Spot gold prices slipped 0.1% to $1754 per ounce after cutting Friday's 0.9% spike following mixed employment data, with the US economy creating jobs much slower-than-expected in September but the unemployment rate dropped to an 18-month low and wages accelerated.
"This should be more than sufficient to keep tapering on schedule for the November announcement," Ian Lyngen, BMO's head of US rates, said in a note, pointing to the wage increase.
Gold prices for UK investors meanwhile dropped 0.4% to £1286 per ounce as Sterling strengthened against the Dollar on the FX market after a Bank of England policymaker said he wants to start raising borrowing costs sooner.
"I think it is appropriate that the markets have moved to pricing a significantly earlier path of tightening than they did previously," said Michael Saunders – one of only 2 policy makers who voted last month to end the BOE's bond buying program immediately – on Saturday. 
With inflation running well above the UK central bank's 2.0% target, "We are going to have a very delicate and challenging job on our hands," governor Andrew Bailey told the Yorkshire Post newspaper.
"We have got to in a sense prevent the thing becoming permanently embedded because that would obviously be very damaging."
Chart of UK gold price, adjusted by CPI index (base = Jan 2016), versus year-on-year inflation. Source: St.Louis Fed
The UK's consumer prices index surged by 3.2% in the 12 months to August, with the pace of inflation showing its largest-ever month-on-month increase on the current CPI data beginning January 1997.
Data for September are due next Wednesday.
European gold prices meantime edged lower by 0.1% to €1518 per ounce Monday as the single currency continued to hold 15-month lows against the Dollar after European Central Bank president Christine Lagarde reiterated her call against "over reacting" to what she calls a "largely temporary" rise in inflation in an interview with Der Spiegel.
Consumer price inflation in the 19 countries sharing the Euro accelerated to 3.4% year on year in September, a 13-year high.
Oil prices rose further on Monday, extending multi-week gains, as Brent crude was up 2% at $84 per barrel, the highest level since October 2018, while US oil rose 2.5% at $81.30, the highest since late 2014.
Spot silver held 0.5% down at $22.56, giving back last week's gain.
The price of platinum – which finds two-thirds of its demand from industrial uses, led by auto-catalysts but also including hydrogen fuel cells – held at $1029 per ounce, the highest level since early August.
Platinum ended Friday with its best weekly gain since late June, by increasing 5.1% in US Dollar terms. 
US bond markets and most banks are closed for Columbus Day, although the New York Stock Exchange and the Nasdaq will both open.

Atsuko Whitehouse is the Head of the Japanese Market at BullionVault and the Editor of Japanese GoldNews.

See all articles by Atsuko Whitehouse here.

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