Gold prices climbed to a one-week high on Monday, supported by inflation concerns and ongoing geopolitical risks. The yellow metal remains up on Tuesday as Russia-Ukraine concerns bolster the safe-haven metal. The US CPI data, which is critical for gold, will be released on Thursday. Analysts’ market comments and gold price predictions cryptocoin.com compiled for our readers.
Kyle Rodda: US CPI data will be biggest risk for gold this week
“Geopolitical tensions surrounding Russia and Ukraine are pushing gold prices up,” DailyFX strategist Margaret Yang said, adding that investors await Thursday’s US inflation data, adding that January inflation is expected to rise more than December levels.
The US consumer price index for January is expected to hit 7.3% year-on-year, the biggest increase since 1982, according to a Reuters poll. Kyle Rodda, analyst at IG Markets, comments:
US CPI will be the biggest risk for gold this week. A high pressure could likely result in a strong bear market, as traders are placing higher bets on Fed tightening.
Kyle Rodda adds that the 7.3% expected increase in CPI is a high bar that must be met and therefore gold can continue its rise if it goes below.
Ten-year U.S. Treasuries, capping gold’s gains, climbed to near their highest in more than two years. Gold is seen as a hedge against inflation and geopolitical risks, but rate hikes increase the opportunity cost of holding non-yielding bullion.
“The real concern is where we are going with inflation and how aggressive the Fed will be.”
Meanwhile, US President Joe Biden said on Monday that if Russia invaded Ukraine, the Nord Stream-2 gas pipeline would be halted, while British Prime Minister Boris Johnson said sanctions and other measures would be ready. Saying that the Russia-Ukraine tension is in the back of everyone’s mind, RJO Futures senior market strategist Bob Haberkorn comments:
There is a little more safe-haven buying in the gold market. The main concern right now is where we’re going with inflation and how aggressive the Fed will be.
Benchmark 10-year U.S. Treasury yields were near their highest levels since December 2019 after an upbeat U.S. jobs report on Friday. The US inflation figures for January will be released on Thursday, and markets are now pricing in a one-third chance that the Fed will raise a full 50 basis points in March.
Analysts say demand for safe-haven assets like gold is helping to offset pressure from expectations of faster rate hikes in the US this year. Jim Wyckoff, senior analyst at Kitco Metals, wrote in a note that gold and silver prices were boosted in part by the US dollar index, which fell sharply from its late-January high.
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