Gold prices are going up, fuelled by investor anxiety about inflation. If US CPI data for March hits a new high, the precious metal could climb even higher.
The asset has advanced for 3 straight trading days. Gold added 1.1% last week and started this week by gaining 0.1% or $2.60. Yesterday, the precious metal closed at $1,948.20 per ounce.
Gold is currently trying to leave the $1 890-$1 950 price range, where the quote has remained over the past several days. On the technical side, the precious metal's position has begun to improve.
On Monday, the quote reached an intraday high of $1,969 - the highest level since mid-March.
Bullish sentiments in the market are fueled by several factors, the most important of which is today's US CPI data for March.
According to consensus estimates, inflation in the United States is projected to increase to 8.4% year-over-year.
Such a jump could boost demand for safe haven assets. Gold could continue to move upwards, despite a possible hawkish policy shift by the Federal Reserve.
According to the FOMC March meeting minutes, which were published last Wednesday, the regulator is ready to increase interest rates by 50 basis points if inflationary pressures continue to rise.
The hawkish Fed position pushed the yield of 10-year US Treasury bonds to a new high of 2.77% for the first time since 2019.
Rising Treasury yields failed to weigh down on gold, which found support in the ongoing stock market slump.
Major stocks indexes closed in negative territory yesterday, with US indexes suffering the biggest losses. US equities nosedived on reports that the Fed could tighten its monetary policy faster than expected.
New lockdowns in China due to an outbreak of COVID-19 in several Chinese cities threaten to reduce demand for oil, fueling panic in the markets.
Another bearish factor for risky assets are geopolitical tensions. New sanctions against Russia threaten to disrupt global supply chains, increasing fears of a global economic slowdown.
Timothy Moe, Co-Head of Asian Economics, Strategy & Commodity Research at Goldman Sachs, sees gold reach $2,500 by the end of the year due to the continued Russia-Ukraine war.