Gold prices surged on Wednesday, hovering under a near five-month peak hit the prior session, as U.S. Treasury yields pulled back.
At the same time, investors anticipated critical economic data this week that will cast light on the inflation outlook.
Spot gold was higher 0.4% at $1,906.80 per ounce at 1:43 p.m. EDT (1743 GMT), after scoring its most distinguished level after Jan. 8 at $1,916.40 on Tuesday. U.S. gold futures settled up 0.3% at $1,909.90.
At this point, it’s the anticipation of some of the economic news getting out this week, which will further the worries regarding inflation and will positively influence the momentum in the gold market, stated Jeffrey Sica, founder of Circle Squared Alternative Investments.
The Treasuries have been moderately calm regarding the inflation news, Sica said, replying that momentum in the stock market was preventing gold from breaking above.
Benchmark U.S. 10-year Treasury yields eased under 1.60%, reducing the opportunity expense of holding bullion, which pays no interest, while stock markets wavered near record highs.
Investors are now expecting U.S. payroll data due on Friday to measure cues on future monetary policy.
Bottlenecks in the supply chain and increasing commodity prices could curb U.S. manufacturing growth potential. The Federal Reserve is giving regard to labor market data, Commerzbank analyst Daniel Briesemann stated.
The dollar index edged from session highs, making gold more affordable for different currency holders.
A lower dollar and high inflation (both expected and actual) should grant support to gold. We proceed to see gold at $2,000 sometime in the second half of the year, ED&F Man Capital Markets analyst Edward Meir stated.
Among other precious metals, palladium was even at $2,860.21 per ounce, silver increased 0.7% to $28.10, and platinum slid 0.2% to $1,189.10