World Gold Prices Rise Today Lifted by Inflation and Bond Yields

Purebun.com -World Gold Prices Rise Today Lifted by Inflation and Bond Yields. Today’s gold prices in the world rose triggered by rising fears of inflation encouraging safe-haven for the precious metal. The fall in US Treasury yields added to the support.

Launching the CNBC page, Wednesday (6/8/2022), the price of gold in the spot market rose 0.69 percent to USD 1,853.72 per ounce.

Earlier in the session, gold bullion touched USD 1,836.10, its lowest since June 1. US gold futures were up 0.68 percent at $1,856.3.

“Gold is being supported by growing concerns about inflation, which has historically been a bullish element for the metals market,” said Jim Wyckoff, senior analyst at Kitco Metals.

World stocks and bond yields fell from recent highs on a surprise 50 basis point rate hike in Australia.

The gains raised concerns over policy tightening ahead of this week’s European Central Bank meeting.

Although gold investment is seen as a hedge against higher inflation, rising interest rates remain a potential nuisance.

That’s because it means a higher opportunity cost of holding non-yielding bullion.

“Gold traders tend to view central bank meetings and monetary policy moves as a double-edged sword,” Wyckoff added.

Increasing gold’s appeal on the day, US Treasury yields fell from three-and-a-half-week highs as deteriorating risk appetite boosted demand for safe-haven debt.

Investors Highlight This

World Gold Prices Rise Today Lifted by Inflation and Bond Yields

Investors are now watching inflation data due Friday for clues about the trajectory of the Federal Reserve’s rate hikes.

A half-point rate hike is expected at the meeting of the Federal Open Market Committee on June 14-15.

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“The gap between gold and the real exchange rate can be attributed to the undue rise in the real exchange rate given quantitative tightening, and the long amount of contentment that is still large held in gold, keeping the price of the yellow metal high,” TD Securities said in a note.

As for the prices of other metals, platinum prices fell 0.42 percent to USD 1,013.19 per ounce and palladium fell 0.94 percent to USD 1,983.80. Meanwhile, silver prices rose 0.84 percent to USD 22.24.

Yesterday’s Gold Price

Gold prices fell on Monday, pressured by rising US dollar and Treasury yields. Investors’ attention turned to US inflation data this week that could strengthen the case for aggressive interest rate hikes by the Federal Reserve.

Quoted from CNBC, Tuesday (7/6/2022), the price of gold in the spot market fell 0.5 percent at USD 1,841.29 per ounce at 2:03 pm. EDT (1803 GMT). US gold futures were down 0.4 percent at $1,843.70.

US bond yields were higher ahead of data on Friday expected to show inflation remains high. The dollar also strengthened, making gold less attractive to overseas buyers.

Although gold is seen as a hedge against inflation, higher interest rates to tame rising price pressures dampen appetite for bullion.

“If we get a bit of a hotter inflation report, gold will weaken. It’s kind of a wait-and-see approach to how far we’ll find out how far the Fed is going to raise interest rates to control this inflation,” said Edward Moya, senior analyst at OANDA.

But the overall belief that inflation is slowing and will continue to slow, together with the Fed’s calculated policy, will provide stability to gold prices, Moya added.

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Fed Sentiment

While the Fed is on track to deliver a half-point rate hike at its June and July policy meetings, high inflation figures will add to expectations of aggressive tightening even in the second half of the year.

“Summer trading has officially started, which suggests price could remain range-bound near USD 1850/oz, but the setting remains for additional liquidation on the horizon,” TD Securities said in a note.

Investors are also awaiting the European Central Bank meeting on Thursday.

 

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