Gold prices rose on Friday. As the dollar weakens after global central banks’ moves to withdraw pandemic-era stimulus in response to rising inflationary risks, the precious metal is poised for its best week since mid-November, according to some.
What’s next for gold prices?
The dollar index came under pressure after hitting a one-week low on Thursday, making an ounce of gold cheaper for holders of other currencies. “Gold appears to be mostly responding to the Fed’s decision to stay behind the curve and keep policy fairly loose, and the inflation dynamics continue to push investors into gold as a key store of value,” said Kyle Rodda, an analyst at IG Markets. cryptocoin.com As we have also reported, the Fed said it will pave the way for a three-quarter-point rate hike by the end of 2022 in response to full employment and rising inflation.
Britain became the first G7 economy to raise interest rates since the start of the pandemic on Thursday, and the European Central Bank has reined in stimulus a bit. The Bank of Japan decided on Friday to cut corporate debt purchases to pre-pandemic levels. “The US 10-year real yield has sunk further into negative territory and kept the investment floor supportive,” ANZ analysts wrote in a research note.
Reduced incentives and interest rate increases tend to increase government bond yields, raising the opportunity cost of holding interest-free gold. “The market appears to be approaching the $1,800 gold price and moving towards $1,830, which might be key levels to look at,” Rodda added. At the time of writing, the price of an ounce of gold is changing hands at $1,807.
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