Gold prices rise ahead of US Federal Reserve meeting

  • 24 January, 2022
  • 3:01 pm EET

Gold prices rose on Monday at the start of the week, as investors sought to cover the safe-haven metal against inflation risks and concerns over the dispute between Russia and Ukraine.

This comes at a time when markets are waiting for signs of an interest rate hike from the US federal policy meeting this week.


Gold Price Today

The price of gold futures contracts – April delivery – increased by 0.53%, or $9.80, to reach the level of $1839.90 an ounce.

The spot price for the yellow metal also rose by 0.32%, to record $1,838.51 an ounce.

At the same time, the price of silver futures contracts – for March delivery – decreased by 0.12%, recording $24.29 an ounce.

On the other hand, the spot platinum price increased by 0.3%, to record $1027.64 an ounce, while the spot palladium price rose by 9.05%, to record the level of $2119.10 an ounce.


Inflation Crisis

“The market is waiting for (FOMC) data… Crude oil is on the rise, so inflation is expected to pick up, which is supporting gold prices,” said Jigar Trivedi, a commodities analyst at Mumbai-based stockbroker Anand Rathi Shares.

The US Federal Reserve is expected to tighten monetary policy at a much faster pace than was thought a month ago; To tame persistently high inflation, which economists polled by Reuters see as the biggest threat to the US economy over the next year.

The Federal Open Market Committee of the US Federal Reserve is scheduled to meet on January 25-26.

Gold is generally seen as an inflation hedge, but the yellow metal is highly sensitive; to the rise in US interest rates; This increases the opportunity cost of holding non-interest bearing bullion.


US Bonds

The benchmark 10-year US Treasury yield fell on Friday; This reduced the opportunity cost of holding interest-free bullion.

Investors have sought cover from concerns about a possible extension of US sanctions or new EU measures if Russia attacks Ukraine, said Avtar Sando, an analyst at Philip Futures.

On Sunday, after the United Kingdom accused the Kremlin of seeking to install a pro-Russian leader there, a senior British minister said Russia would face severe economic sanctions if it imposed a pro-Russian regime in Ukraine.

Spot gold could retest resistance at $1,850 an ounce, and a break above there could lead to gains between $1,860 and $1,872, according to Reuters technical analyst Wang Tao.





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