Gold prices got a boost in the new week, capitalising off of the previous week’s gains where gold prices jumped more than $40 to above the $1,750/oz level again. The safe haven continued its uptick into the new week on worries that the recent rally in crude oil will stoke inflation fears further.
Gold is the real hedge against inflation, so as investors renewed their concerns about inflationary pressures and tighter monetary policy, gold improved and U.S Treasury bond yields turned back below 1.5% with the Dollar Index (DXY) declining almost 1%.
Last week’s calm in global markets has been shattered by a growing wall of worry spanning a debt crisis in China, signs of elevated inflation on the back of commodity supply shocks and fading economic recovery and U.S. political bickering.
The turbulence comes even as expectations for a tapering of stimulus by the Federal Reserve provided headwinds to gold prices for the past few weeks. Investors seem convinced that the Fed would begin rolling back its massive pandemic-era stimulus as soon as November and raise interest rates in 2022 – which has weighed down non-yielding gold.
Therefore, gold bulls should watch for U.S nonfarm-payrolls data out this Friday to gauge whether the strength of this upward bounce in the gold price will continue.
The yellow metal was last seen trading at $1,758/oz.