The increase in US consumer inflation is higher than inflation, making gold hunted as a hedge asset. Gold prices also jumped nearly two percent.
Gold prices skyrocketed after the US Consumer Inflation (CPI) data was reported to have risen higher than expected.
This time the US Dollar strengthened, did not prevent the increase in gold prices. The XAU/USD chart jumped 1.76% to $1,863 an ounce, its highest since June 16.
The increase in spot gold prices touched 0.8% to $1,846.51 per ounce, although some time after the release of US CPI data, spot gold prices had fallen half a percent.
Meanwhile on the Comex in New York, gold futures rose 1.1% to $1,851.40.
The US Bureau of Labor reported that US CPI inflation rose 6.2% in October on an annualized basis.
Meanwhile, on a monthly basis, inflation spiked to 0.9%, higher than expectations of 0.6% and 0.4% previously.
Meanwhile, the US Core CPI, which excludes prices for volatile goods such as food and energy, also rose from 0.2% to 0.6% in October.
"Once again we have hot inflation data," said David Meger, analyst at High Ridge Futures. "With gold serving as a classic hedge against inflation, we believe inflation will be the positive factor that will underpin the gold market rally in the weeks and months ahead."
However, Meger warns that inflation like this is like a double-edged sword.
Soaring inflation not only boosted buying interest in gold as a safe haven asset, but also fueled expectations of faster monetary tightening than anticipated.
If so, then the price of gold could fall again at any time.
Gold Prices Will Be Supported By Low Interest Rates
In the last few trading sessions, precisely after the Fed confirmed its commitment to keep interest rates low, gold prices have generally moved in the range of two-month highs.
Moreover, the US central bank also still thinks that the increase in inflation is temporary.
As a non-yielding asset, investing in gold will be quite safe in conditions of low interest rates.
According to Craig Erlam, an expert from OANDA, the current market perception of rising interest rates is getting higher.
However, Erlam is of the view that central banks, including the Fed, have not shown any interest in following up on this matter.
Therefore, the gold price is likely to stay at the high level.
Post a Comment for "Gold Prices Skyrocket After US Inflation Data Release"