Gold closes at $ 1,800 after the strongest week in 4 months
By Barani Krishnan
Investing.com – Gold had its best week since December. US inflation risks and the reintroduction of political risk hedging helped the yellow metal achieve a potential return of $ 1,800.
Comex in New York was up $ 13.40, or 0.8%, to $ 1,780.20 an ounce. Previously, the company had hit a seven-week high of $ 1,784.55, the first time since Feb.26 to hit a price of $ 1,780.
Gold wasn’t far from futures, rising $ 13.79, or 0.8%, to $ 1,777.70 at 3:12 p.m. ET (19:12 GMT) after peaking at $ 1,783.83. Movement in Spotgold is an integral part of fund managers who sometimes rely on it more than futures as a guide.
Gold’s resurgence this week came as US bond yields fell amid a surge in consumer prices that reaffirmed the yellow metal’s diminished role as a hedge against inflation.
The sweeping sanctions the United States imposed on Russia on Thursday also brought gold back – at least in the eyes of some – as a safeguard against political risk.
US bond yields as measured on Friday were 1.58%, well below the 14-month high of 1.77% on March 30th.
“It seems that the bond market is finally buying into the Fed’s lows for an extended period of time, which would not support high-yielding gold,” said Sophie Griffiths, research director for the UK and EMEA at online broker OANDA.
Gold has been curbed in recent months by bond yields and the dollar, which has soared, often on the argument that the US economy’s recovery from the coronavirus pandemic may exceed expectations, as the Federal Reserve kept interest rates near zero.
Griffiths noted that given the mounting showdown between world powers America and Russia, geopolitics was also “back with a bang” this week, driving investors towards safer havens like gold.
A weaker dollar, which typically boosted the yellow metal, contributed to the strength of gold. The one that positions the greenback against the and five other major currencies weakened to 91.56 on Friday from 91.62 on Thursday’s settlement.
Gold saw a surge in mid-2020 as it rose from lows of less than $ 1,500 in March to record highs of nearly $ 2,100 by August, responding to inflation concerns sparked by the first $ 3 trillion US tax break granted to the Coronavirus pandemic has been approved.
However, breakthroughs in vaccine development since November, as well as optimism about the economic recovery, forced gold to close trading at just under $ 1,900 in 2020.
That year, at one point in March, it fell below $ 1,660.
This weakness in gold is noteworthy given the $ 1.9 trillion Covid-19 incentive passed by Congress in March and the Biden administration’s plans for additional infrastructure spending of $ 2.2 trillion. Dollar.
Typically, stimulus measures cause the dollar to depreciate and inflate, causing the gold price to rebound as a hedge against inflation. However, there have been logically suspended gold sales in the past six months, and some Wall Street banks have made nonsensical comments in support of them.