For the third day in a row, gold prices continued to rise, supported by the decline in dollar prices, which provided a fertile ground for investors to seek the precious metal.
Many investors expect rising inflation to prompt central banks to raise interest rates sooner than expected.
Gold Prices Today
By 08:52 AM GMT (11:52 AM GMT), the gold futures contract for December delivery rose 0.09%, to $1,786.50 an ounce.
The spot price for the yellow metal also rose 0.2%, to $1,785.66 an ounce.
Gold prices rose by more than $14 at the end of trading on Wednesday, as the US currency fell, and concerns persisted about raising interest rates earlier than expected.
Bullion prices have traded between $1,748 an ounce and $1,800 an ounce so far this month.
The dollar is hovering near its lowest level in 3 weeks, today, Thursday; This prompted the mineral to approach the higher end of this broad range.
“The overall trend in gold has not really built momentum because it is unclear where real yields will fall given the uncertainty over whether the Fed will act fast enough to contain inflation or if inflation will outpace tightening,” said Ilya Spivak, currency strategist at DailyForex.
“While the general bias for gold points is decreasing due to the rising yields environment, we are unlikely to get a strong boost in direction until it becomes clear how aggressively the Fed is acting,” he added.
Record US 10-year yields hit 5-month highs; what pressure on the alloy; The higher returns translate into a higher opportunity cost of holding the metal that pays no interest.
Two US Federal Reserve officials said on Wednesday that while the central bank should start winding down its stimulus measures; It is too early to raise interest rates.
Rising inflation expectations and declining growth expectations, especially amid rising energy prices and slowing manufacturing activity, UBS analysts said, in a note, could support gold prices in the next month or two.
The bank expects gold prices at $1,700/oz at the end of March 2022 and $1,600 by the end of December 2022.
Gold is often seen as a hedge against inflation, although lower stimulus and higher interest rates lead to higher government bond yields; This reduces the attractiveness of the alloy.
Energy Price Hike
“Gold remains supported by inflationary pressures due to higher energy prices and weak data from factory production in China and the US,” said Xiao Fu, head of commodity markets strategy at the World Bank of China.
On the downside, there is a demand for safe haven from global growth concerns, “but the upside continues to be limited by a potential rise in Treasury yields and declining expectations.”
Production at US factories fell by the most in 7 months last September, another indication that supply constraints were hampering economic growth.
Federal Reserve Governor Christopher Waller said on Tuesday that if inflation continues to rise at its current pace in the next few months; Fed policymakers may need to adopt a “more aggressive policy response” next year.
England and Russia
The Bank of England will be the first major central bank to raise interest rates in the post-pandemic cycle, but economists, polled by Reuters, believe the first increase won’t come until early next year, after markets set rates.
The Russian Central Bank also said, on Wednesday, that Russia’s gold reserves amounted to 73.9 million ounces as of the beginning of October.
“Over the past few weeks, US Treasury yields have soared as inflation fears grow, yet gold has struggled to make any significant move one way or the other,” said Michael Hewson, chief market analyst at CMC Markets. $1,820″.
The price of silver futures contracts – for December delivery – decreased by 0.55%, to reach $24.31 an ounce.
The spot platinum price was also adjusted by 0.21%, recording $1051.15 an ounce, while the spot palladium price declined by 0.61%, recording $2,062.04 an ounce.
Russia’s Nornickel, the world’s largest palladium producer, said its palladium production in the third quarter increased by 9% to 598,000 ounces, while platinum production increased by 8% to 145,000 ounces.