Gold paused its rise Thursday as economic data from America revealed that inflation is higher than expected.
Based on this data, the Federal Reserve signaled that it will maintain its restrictive monetary policy until inflation returns to its target level of 2%. Consequently, the Federal Reserve will not be in a hurry to lower interest rates, as investors might prefer, but the tightening cycle is nearly at the finish line—this is positive for gold.
Moreover, amid the growing economic and geopolitical uncertainty, demand for safe-haven assets is beginning to rebound. Investors should keep an eye on the precious metal as it may be on the verge of a change in dynamics.
On the U.S. bond front, their sell-off was fairly orderly as markets adjust to the Federal Reserve's aggressive monetary policy, and there is some concern that yields may rise as the market attracts fewer investors.
After inflation data was released, which remained consistently high, the U.S. Department of the Treasury stated that the auction of $20 billion in 30-year bonds attracted average demand.
However, there is another "but," and that is the growing debt and deficit in the U.S. The total deficit for the last 12 months amounts to $1.9 trillion. It is slightly below the extreme level but still substantial and will be negative for the U.S. dollar and positive for gold.
Gold always remains an attractive investment because, in the long term, prices will continue to rise. The precious metal is in focus today.
During the Asian session, gold has already started to be bought at Thursday's favorable price.