Gold hits 1-week high as inflation worries lift appeal

Feb 7 (Reuters) - Gold prices hit a more than one-week peak on Monday, as inflationary pressures due to surging oil prices helped cushion the impact of a U.S. Treasury yield rally after an upbeat jobs report, while a drop in equities also boosted bullion's appeal.

Spot gold rose 0.2% to $1,810.26 per ounce by 0420 GMT, after hitting its highest since Jan. 27 at $1,814.91 earlier in the session. U.S. gold futures edged up 0.2% to $1,810.90.

"The largest component of inflation currently, beyond the supply chain issues, is oil prices. And this is a problem no matter how high you move interest rates," said Stephen Innes, managing partner at SPI Asset Management.

"Gold is getting a little bit defensive, realizing that we could be in this state for hyperinflation."

Oil prices rose on Monday, with Brent crude touching its highest since October 2014.

Asian share markets slipped after stunningly strong U.S. jobs data soothed concerns about the global economy and sent benchmark 10-year U.S. Treasuries to their highest levels since December 2019 on Friday.

U.S. inflation data for January is due on Thursday and strong data could further fuel Federal Reserve's plan to raise interest rates after the U.S. employment report showed nonfarm payrolls jumped by 467,000 jobs last month. read more

Bullion is considered a hedge against inflation and geopolitical risks, yet rate hikes would raise the opportunity cost of holding non-yielding bullion.

Gold was also supported as tensions between the West and Russia over Ukraine lingered. Two U.S. officials said on Saturday Russia had in place about 70% of the combat power it could need to invade Ukraine. read more

Elsewhere, silver jumped 1.2% to $22.75 per ounce, platinum was steady at $1,024.44, and palladium rose 0.7% to $2,300.04.

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