On Tuesday, the spot level prices of Gold remained stable as the yellow metal was supported by the rising inflationary pressures. This week’s inflation data is expected to influence the US Federal Reserve’s further course of action. This played a major role in stacking the gold up near the previous week’s high.
At 0100 hours GMT, the spot price of gold was marked at $1,821.26 per ounce. The week’s high on Monday was at $1,823.21. Although the gold price increased, it managed to trade near the highs. The gold futures price was flattish at about $1,821.30.
Value of Dollar and 10Y US Treasuries
When it comes to comparing prices of yellow metal, it can be well compared with US Dollar and 10-year US treasuries. While the value of the dollar did not change much, the 10-year US treasuries shot up.
Similar to gold, the benchmark treasuries traded at the highest price on Monday. The 10-year US treasuries traded at the highest price in over two years since Dec 2019. The prices seemed stable near Monday’s high price.
US Inflation Data
The inflation data of the US is expected to come out this week. The markets have now factored in the probability of the Federal Reserve increasing the interest rates by almost 50 basis points in Mar 2022.
Investors consider gold as a hedge asset to protect their investments against inflation and other risks related to geopolitics and trade-wars. However, the probable increase in the interest rates is likely to push the opportunity cost of gold higher.
The European Central Bank believes that the inflation in Euro-zone seems to be under control. The inflation rate in Europe is about to fall and the Central Bank is expecting it to settle down somewhere around 2%. The Central Bank also believes that no major monetary policy changes will be required in this regard.
Oil Prices and other geopolitical factors
The increasing energy prices are the biggest factor that reduces the purchasing power. But thanks to the positively progressing nuclear talks between Iran and the US. The crude price eased on Monday.
The Ukraine standoff is also very likely to play a crucial role in inflation and gold prices. The recent meeting between Russia’s Vladimir Putin and French President Emmanual Macron indicates a positive outcome.
How will the US-Iran nuclear talks affect the oil price?
The positive outcome between the United States and Iran concerning the nuclear deal will lead the United States sanctions to be lifted from the Iranian oil sales. This in turn will directly impact the oil prices and the prices might ease.
What is the Russia-Ukraine standoff all about?
Recently, Russia is trying to invade Ukraine and win control like it was back in history. It has been said that Vladimir Putin, the president of Russia, has asked the Russian military to be active near the Ukraine border and is allegedly supporting the militants. This can have a direct impact on inflation, taking gold prices even higher.
With the rise in gold prices, is there any change in silver and other metal prices?
The price of silver has also gone up but the rise is not as high as the gold prices. Silver was marked to trade higher by merely 0.1% at $23.01 for an ounce, whereas palladium went up by 0.2% to trade at $2266.79. Platinum, on the other hand, remained stable at $1020.06.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.