(Updates with Settlement Prices)

By Barani Krishnan

The key $1,800 mark was reached by Investing.com on Wednesday, as a result of weeks of rising oil prices.

The rally was apparently triggered by latest U.S. CPI data that proved to be another affirmation of inflation in the world’s largest economy.

After weeks of being stuck in the mid-to-lower $1,700 levels, the move helped validate to some extent the “safe-haven” and ‘inflation hedge” labels typically applied to the yellow metal, which many investors see as the last resort in times of political and financial troubles.

“A Jekyll and Hyde inflation report sent gold prices on a wild ride,” Ed Moya, analyst at OANDA, said, referring to the CPI report. “Longer lasting inflation just went from rushing interest rate hikes forward to destabilizing large parts of the global economic recovery.”

Moya observed that this week’s markets have gone from pricing in the possibility of a December 2022 U.S. interest rate increase to high-confidence that September 2022 would be the Federal Reserve’s “lift-off” time.

U.S. gold futures’ most active contract, , settled at $1,794.70 per ounce on New York’s Comex, up $35.40, or 2%. It was peak session at $1,797.30

On Sept. 15, gold was at its highest point of $1,800.

Wednesday’s rally came after the Labor Department reported that consumer prices in the United States rose by 5.4% in the year to September as rallying commodity markets from oil to coffee kept the pressure up on the world’s largest economy.

The International Monetary Fund lowered its forecast for world growth in 2021 to 5.9%, down from 6% previously. It stated that global momentum is declining and there has been more uncertainty.

IMF is concerned about the possibility that more volatile commodity prices may force central bank to increase interest rates faster than they have previously planned. This could lead to selloffs in global equity markets. Central banks may be forced to raise interest rates sooner than originally planned because oil prices are at their highest level in seven years, above $80 per barrel.

While gold appeared to have a tentative resistance at $1,800, “that might not prove to be too difficult to breach if risk aversion runs wild”, Moya said.