The gold price has continued to rise past the $1,950 significant resistance level. With the forthcoming US inflation report and hawkish tone hints, its prominence as an inflation barrier and safe haven will keep boosting its price.
Financial markets will focus on this week’s US inflation data in the next few days. For example, investors will focus on the CPI numbers on Tuesday and PPI and retail sales during the week.
The consumer prices in the US rose to 7.9% in 40-years in February on a year-on-year basis. Analysts predict a rise to 8.5% in March and an unchanged CPI of 0.5 Mom, excluding the volatile food and energy basics. The current Ukraine crisis has caused inflation to rise, bringing a hike in energy and food prices.
With an escalation report of the inflationary pressures, the Treasury yield may continue to rise, boosting the US dollar. Co-currently, the benchmark 10-year yields were at 2.74%, a drop from its three-year 2.78% highest on Monday. The rise in the US bond yields is the effect of the Fed’s tough hawkish tone to curb inflation.
According to FOMC last week’s meeting minutes, investors predict a hawkish Fed by a half-percentage point with subsequent meetings as officials announce more tightening against rising inflation.
A rising US dollar and Treasury yields may curb gold price gains; its prominence as a safe haven will keep boosting its value, and It may stay above $1,900 through the week. Investors are still worried about a slow hawkish Fed against rising inflation. Hence, it will continue rising soon.
Moreover, the current Ukraine crisis will boost the gold price next week. On Sunday, the Defence Ministry in Russia announced using high-precision missiles on Ukraine’s 86 Military targets. Ukraine’s invasion in February led to an increased demand for precious metals and other safe-havens.