Global demand for gold rises to the highest level since late 2018

Gold prices rose, during trading today, Wednesday, May 11, 2022, regaining its strength from its lowest level in 3 months.

The rise comes with weak dollar and treasury yields, ahead of the release of key US monthly inflation data that may influence the monetary policy stance of the Federal Reserve and affect demand for the precious metal.

Gold prices today

By 08:15 AM GMT (11:15 AM Mecca Al Mukarramah), gold futures prices – for June delivery – rose by 0.48%, equivalent to $ 8.90, to reach the level of $ 1849.90 an ounce.

Yesterday, gold prices ended about $18 lower, with the US dollar rising near two-decade highs.

The spot price for the yellow metal also rose by 0.59%, at the level of $ 1849.17 an ounce, after hitting its lowest level since February 11, earlier in the session.

The price of silver contracts – for July delivery – also rose by 1.19%, to reach $21.68 an ounce.

On the other hand, the price of palladium decreased by 0.54%, recording $ 2057.23 an ounce, while the price of spot platinum rose by 2.16%, at $ 989.43 an ounce.

gold prices
Gold prices – archive

US bonds

The benchmark 10-year US Treasury yields fell for the third consecutive session, increasing the demand for non-yielding gold.

The dollar also declined, albeit at elevated levels, making dollar-denominated bullion more attractive to overseas buyers.

Analysts expect a sharp decline in the monthly growth of the US consumer price index for April, due to be announced at 12:30 pm GMT (3:30 pm Mecca), down to 0.2% from 1.2% in the previous month, and an increase annual rate of 8.1%.

US Federal Reserve officials on Tuesday reinforced their arguments for the fastest series of interest rate increases since at least the 1990s to combat inflation.

Gold Price Forecast

Gold is sitting at a critical price support level around $1,830 an ounce, and if inflation is weaker than expected, prices may rebound, with investors prioritizing the impact of the data on the Federal Reserve rather than the yellow metal’s role as a hedge, said DailyForex currency strategist Ilya Spivak. .

Spivak added that if inflation is in line or even slightly above, which is the main risk, gold could break lower through $1,800, and possibly head toward the next big test at $1,680, Reuters reported.

interest rates

Higher US short-term interest rates raise the opportunity cost of holding bullion.

“The problem for investors in gold and other commodities that have been used as a hedge against inflation is that the Fed will raise interest rates at any cost to quell the inflation fires,” said Stephen Innes, managing partner at SBI Asset Management.

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