Price of Gold Jumped on Monday Morning

Gold strengthened its position on Monday morning in Asia, while U.S. Treasury yields benefited from hawkish signals from the U.S. Federal Reserve. Moreover, markets are beginning to price in a sooner-than-anticipated reduction in the central bank’s balance sheet. 

Gold futures gained 0.16% to $1,819.40 by 11:36 PM ET (4:36 AM GMT). Moreover, benchmark 10-year U.S. Treasury yields remained near two-year highs hit during the previous week. 

Last week, Federal Reserve’s Jerome Powell told lawmakers that the country’s economy is ready to start tighter monetary policy. Apart from Jerome Powell, other Fed officials also indicated that the Federal Reserve will likely hike interest rates in March 2022. 

The Federal Reserve will meet to hand down its next policy decision on January 25 to 26. Another important central bank will hand down its decision in the near future. The Bank of England will announce its decision on February 3.

Gold and central banks

The Bank of Japan will announce its latest policy decision on January 18.

The People’s Bank of China made an interesting decision by reducing borrowing costs for medium-term loans for the first time since April 2020. 

The country’s gross domestic product (GDP) grew 4% year-on-year and 1.6% quarter-on-quarter in the last quarter of 2021. The information provided by the National Bureau of Statistics also showed that industrial production rose 4.3% year on year. Retail sales grew 1.7% year-on-year in December. 

Meantime, physical gold buying declined in India during the previous week due to rising prices and Covid-19. In China, a top consumer of gold, demand stabilized as the Lunar New Year holiday approaches.

Gold rose on Monday morning, but other precious metals were not so lucky. Silver, as well as platinum, dropped 0.3%, and palladium declined 0.4%.