FX.co ★ Gold gradually rises, accumulating strength for a big push

On Monday, gold managed to recover more than half of the losses during last Friday's trading. Yesterday, the precious metal increased by 0.1% while waiting for the US Fed meeting. It can be recalled that it closed with a -0.2% at the end of the week. Thus, the price of the June futures on the New York COMEX exchange was $ 1,780.10.

At the same time, other metals also showed an upward trend. Silver rose by 0.5% to hit the $ 26.21 mark. Copper also did by 2.4%, surging to its highest level since the summer of 2011 at $ 4.44. This is followed by Platinum, which also gained 1.0%, reporting to $ 1,245.20. Lastly, Palladium broke another record, surging by 1.8% to set the price at $ 2,909.30.

This upward trend in the metals market continues this morning. Earlier, the June gold contract managed to soar to $ 1,781.45. Its increase was symbolic and amounted to 0.08% compared to the previous close. In addition, Silver slightly increased by 0.07%, although the quotes of both assets fluctuated downward a little bit before that.

Now, investors' attention is focused on the US Fed meeting. In anticipation of an important meeting, the metals market is in an uncertainty state, which hinders the possibility of sharp movements.

Meanwhile, most market participants are inclined to believe that the US Central Bank will not change the course of monetary policy. There is a high possibility that the Fed will announced again that interest rates will not be increased this year, although economic indicators are improving, and at the same time, inflationary concerns are increasing.

The price of gold may increase if the Fed Chairman continues to set aside the inflation growth. Commenting on the situation before the meeting, Carsten Fritsch from Commerzbank said that this will only strengthen suspicions that the authorities are ready to allow the rate of increase in rates to lag behind inflation and to "overheat" the economy.

Analysts from TD Securities also believe that the weakening of inflationary expectations, which the Fed is now seeking, will become a good thing for gold. This will be one of the potential catalysts for its rapid growth in the future. In the history of the United States, there has already been such an example when the safe-haven asset reached unprecedented heights amid the authorities' deliberate disregard for inflation.

In the 1970s, America experienced some of the highest inflation rates in recent history, but the then Federal Chairman, William Miller, did not directly deal with inflation and was very cautious about tightening monetary policy, since he did not want to destroy the economy. As a result, negative interest rates sent gold to a record high. The asset in January 1980 rose to a high of $2,927 at current prices.

Experts see many similarities between that period and the current situation and believe that the Fed's attitude to inflation as a temporary phenomenon could lead to much higher gold prices in the future. Based on their forecasts, the main precious metal may strengthen above $ 1,900 during the year.

Meanwhile, gold's pricing in the short term may be affected by two events expected this week. Tomorrow, the US president intends to address Congress, and the day after that, the statistics on US GDP for the first quarter will be released. Thus, the further fate of the US dollar, which is the main competitor of the classic asset, depends on both factors.