Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Gold Closes at 5-Week Highs, Boosted by US Inflation Risk

Published 12/23/2021, 02:52 PM
Updated 12/23/2021, 03:04 PM
© Reuters.

© Reuters.

By Barani Krishnan

Investing.com - Gold settled on Thursday at its highest level in five weeks, boosted by U.S. inflation risk after latest data showed the world’s largest economy facing its worst price pressures in four decades.

U.S. gold futures’ most active contract, February, settled up $9.50, or 0.5%, at $1,811.70 an ounce on New York‘s Comex. That was the highest close since Nov. 19 for a spot contract in Comex gold.

“Gold should have a strong 2022 as the risks to the outlook remain elevated,” Ed Moya, analyst at online trading platform OANDA, said, after the Federal Reserve’s closely watched inflation barometer — the Personal Consumption Expenditures Index — grew by 5.7% in the year to November.

Historical data showed it to be the largest annual growth in the so-called PCE in 39 years. Prior to this, data showed the U.S. Consumer Price Index, or CPI, rising 6.8% in the year to November, growing at its fastest pace since 1982. U.S. producer prices also jumped by a record 9.6% year-on-year in November.

Gold has traditionally been touted as a hedge against inflation, although that argument was weakened earlier this year as the yellow metal’s prices steadily fell in the face of ramping price pressures in an U.S. economy rebounding aggressively from the coronavirus pandemic.

For the week, February gold rose 0.4%. Thursday is the last trading day for U.S. markets, which will be closed on Friday in observation of Saturday’s Christmas holiday.

Gold’s has rallied lately despite the Federal Reserve announcing an expedited timetable for ending its pandemic-era stimulus and raising interest rates for the first time since the Covid-19 outbreak of March 2020. The Fed has said it could have as many as three rate hikes in 2022.

News of rate hikes are almost always bad for gold. This time though, traders in bullion appear focused on the U.S. inflation story, allowing gold to play its traditional role as a hedge against that, although strong Fed action to right the situation could still be negative for the yellow metal.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.