By Barani Krishnan

Investing.com – Gold settled on Thursday at its highest level in five weeks, boosted by U.S. inflation risk after latest data showed the world’s largest economy facing its worst price pressures in four decades.

U.S. gold futures’ most active contract, , settled up $9.50, or 0.5%, at $1,811.70 an ounce on New York‘s Comex. That was the highest close since Nov. 19 for a spot contract in Comex gold.

“Gold should have a strong 2022 as the risks to the outlook remain elevated,” Ed Moya, analyst at online trading platform OANDA, said, after the Federal Reserve’s closely watched inflation barometer — the Personal Consumption Expenditures Index — grew by 5.7% in the year to November.

Historical data showed it to be the largest annual growth in the so-called PCE in 39 years. Prior to this, data showed the U.S. , or CPI, rising 6.8% in the year to November, growing at its fastest pace since 1982. U.S. producer prices also jumped by a record 9.6% year-on-year in November.

Gold has traditionally been touted as a hedge against inflation, although that argument was weakened earlier this year as the yellow metal’s prices steadily fell in the face of ramping price pressures in an U.S. economy rebounding aggressively from the coronavirus pandemic.

For the week, February gold rose 0.4%. Thursday is the last trading day for U.S. markets, which will be closed on Friday in observation of Saturday’s Christmas holiday.

Gold’s has rallied lately despite the Federal Reserve announcing an expedited timetable for ending its pandemic-era stimulus and raising interest rates for the first time since the Covid-19 outbreak of March 2020. The Fed has said it could have as many as three rate hikes in 2022.

News of rate hikes are almost always bad for gold. This time though, traders in bullion appear focused on the U.S. inflation story, allowing gold to play its traditional role as a hedge against that, although strong Fed action to right the situation could still be negative for the yellow metal.