Gold futures were up 2% on Wednesday, bringing prices to their highest in a month as the US dollar and bond yields fell after the September inflation report.
The precious metal then eased slightly in electronic trading Wednesday afternoon, shortly after the release of the minutes of the Federal Reserve’s September 21-22 monetary policy meeting.
The US CPI report showed that inflationary pressures continue to rise and “gold, as a hard currency, has historically been viewed by investors as a hedge against inflation,” said Colin Cieszinski, chief market strategist at SIA Wealth Management.
“As there have been signs in the last few days between the rise in commodity prices … the rise in wage inflation and price inflation, there have been signs that inflation is likely not transient – the role of gold as a defender against inflation has come to the fore again.” he told MarketWatch. According to Tseshinsky, the weakness of the US dollar also contributed to the fact that gold along the way.
The September consumer price index in the US rose 0.4% against expectations of 0.3% for the month. Excluding volatile food and energy, CPI rose 0.2% after rising 0.1% in August, the lowest gain in six months.
In the 12 months to September, CPI rose 5.4% after rising 5.3% year-on-year in August, while core CPI rose 4.0% year-on-year after rising 4.0% in August …
“The acceleration in headline consumer inflation in this CPI report makes the Fed’s inflationary action both imperative and inevitable,” said Jason Schenker, president of Prestige Economics, in an email commentary. “We continue to believe the Fed is likely to announce its planned quantitative easing (QE) cut on November 3. He also said he expects the Fed to raise interest rates next year.
QE tends to support gold prices, but many expected the Fed to announce next month that it would start cutting back on monthly bond purchases.
Against this background, December gold GC00,
The stock rose $ 35.40, or 2%, to $ 1,794.70 an ounce, after rising 0.2% on Tuesday. Prices for the most active contract reached their highest settlement level since September 15, according to FactSet.
Meanwhile, silver for the December delivery of SIZ21,
Shares rose 66 cents, or 2.9%, to $ 23.17 an ounce on Wednesday after falling 0.7% a day earlier. Prices also ended at their highest level since September 15th.
“Gold rose mainly on expectations that inflation will continue to rise in the fourth quarter,” said Chintan Carnani, research director at Insignia Consultants.
“Central banks’ tolerance for hyperinflation will be tested this quarter,” he said, adding that there was a $ 1,781 technical break in gold, followed by shorts.
In electronic trading shortly after the Fed’s minutes were published on Wednesday, gold prices fell slightly to $ 1,793.50.
The September Fed meeting minutes were released about half an hour after the Comex gold futures settlement, and confirmed that central bank officials were discussing a plan to slow the pace of asset purchases by $ 15 billion a month.
Fed No. 2 Richard Clarida said earlier this week that the economic recovery from COVID-19 essentially meets the criteria required to announce a cut in monthly purchases of Treasury and mortgage-backed securities, which took effect in June. 2020.
The Fed’s minutes will be key to trading on Thursday, Karnani said.
Until Wednesday, gold mostly posted small losses and traded in a relatively narrow range from $ 1,750 to around $ 1,770 an ounce. Gold bulls noted that the precious metal has managed to maintain relative strength despite the strengthening of the US dollar and steady growth in Treasury yields, which can compete with bullion for those investors looking for a safe haven in uncertain times.
“On the commodity mix, gold has shown remarkable resilience in recent sessions, absorbing a stronger dollar and a surge in yields without too much trouble,” Marios Hadjikiriakos, senior investment analyst at XM, wrote in a daily note.
However, at trading on Wednesday, the dollar, judging by the ICE US Dollar Index DXY,
decreased by 0.5% to 94.068, and the yield on 10-year Treasury bonds TMUBMUSD10Y,
was 1.548% compared to 1.579% on Tuesday.
On other Comex trades, December copper HGZ21,
The shares rose 4.4% to $ 4.516 a pound, the highest since July. January Platinum PLF22,
rose 1.2% to $ 1,024.20 an ounce, and palladium PAZ21 in December,
closed at $ 2106.10 an ounce, an increase of nearly 2.9%.
“There is now a significant rise in the price of copper and industrial metals … due to concerns about a reduction in supply,” Karnani said.