Gold price rebounded from a three-month low on Wednesday as dollar and Treasury yields weakened ahead of key US monthly inflation data that could affect the Fed’s monetary policy stance and bullion demand.
“If inflation is higher than expected, gold price may go to $ 1,680”
As you can see from the news of Cryptokoin.com , benchmark US 10-year Treasury interest rates , falling for the third session in a row, boosting demand for zero-yield gold. The dollar weakened, albeit at higher levels, making the dollar-priced bullion more attractive to offshore buyers.
Analysts are expecting a sharp decline in the monthly growth of the US consumer price index (CPI) for April, from 1.2% in the previous month to 0.2% and an annual increase of 8.1%. US central bank officials on Tuesday strengthened their arguments for the fastest streak of rate hikes since at least the 1990s to fight inflation.
DailyFX currency strategist Ilya Spivak says gold sits at critical price support around $1,830 and if inflation is softer than expected, prices could bounce as investors prioritize bullion’s impact on the Fed over a hedge role. . The strategist points out the following levels:
If inflation stays in line or even slightly higher, which is the main risk, the gold price could break $1,800 and possibly head towards the next big test, $1,680.
Stephen Innes: Trouble for gold investors Fed rate hikes
Rising short-term US interest rates are increasing the opportunity cost of holding bullion. Stephen Innes, managing partner of SPI Asset Management, comments:
The problem for gold investors and other commodities used as inflation hedges is that the Fed is raising interest rates to put out the inflation fires at all costs.
“Relentless strength in the dollar is putting pressure on gold price”
Gold is under pressure again with the start of the new week. As Commerzbank economists point out, investors are pulling back not only from gold but also from silver. Economists say:
The same factors are putting pressure on the gold price as in recent weeks. The US dollar is firm and bond yields are rising even higher. ETF investors have been pulling out of gold for the past two weeks. Gold ETFs tracked by Bloomberg again recorded 12 tons outflows last week. CFTC’s statistics show that speculative financial investors are turning their backs on gold as well. Thus, 153 tons of gold were sold in the futures markets in the last three weeks. This is probably one reason why the gold price has dropped by $100 or 5% over this period.
