Gold holds above $1,800 mark in Europe

LONDON: Gold prices reclaimed the $1,800 mark on Monday, supported by persisting worries over inflation, as investors looked ahead to the next Federal Reserve meeting for its outlook on monetary policy.

Spot gold rose 0.5% to $1,801.22 per ounce by 1203 GMT. U.S. gold futures rose 0.4% to $1,802.50.

While there is a perception inflation will be transitory, there is a persistent element of pressure, said Michael Hewson, chief market analyst at CMC Markets UK.

Federal Reserve Chair Jerome Powell on Friday reiterated his view that high inflation will likely abate next year, which led gold prices to ease from their September highs in the previous session.

He also said the U.S. central bank should start the process of reducing its support of the economy by cutting back on its asset purchases, but not yet touch the interest rate dial.

"Powell's recent comments may have amplified concerns of inflation sticking around for longer, which is apparently further eroding support for team 'transitory' and fuelling a stronger bid for gold as an inflation hedge," said Han Tan, chief market analyst at Exinity.

"And with Powell seeing a longer runway before the Fed starts hiking rates, such a view is encouraging gold bulls to reclaim the $1,800 handle at the onset of the week," Tan said.

The next FOMC meeting is due on Nov. 2-3.

Investors will also be watching for the meetings of the Bank of Japan and European Central Bank due on Thursday.

The markets are pricing higher inflation and many participants clearly believe that the current high level of inflation is no longer merely temporary, Commerzbank analyst Daniel Briesemann said in a note.

"Gold should profit from this in its role as a store of value," he added.

Meanwhile yields on the benchmark 10-year notes and the U.S. dollar ticked higher, dimming the appeal of the precious metal.

Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, translating into a higher opportunity cost for non-yielding bullion. Spot silver rose 0.4% to $24.40 per ounce. Platinum inched 0.1% higher to $1,041.06, and palladium gained 0.9% to $2,039.87.