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FX.co ★ Gold is like on a trampoline: it will jump, then fall

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Analysis News:::2021-07-16T11:57:58

Gold is like on a trampoline: it will jump, then fall

Gold is like on a trampoline: it will jump, then fall

On Thursday, the price of gold rose to the highest level since June 16 at $1,829. Its increase compared to the previous close was $4, or 0.2%.

The asset rose in price following the results of 3 consecutive sessions, gaining a total of 1.2% during this period. Moreover, the quotes rose the most on Wednesday – by 0.8%. This was helped by the comments of the head of the US Federal Reserve.

It can be recalled that on Wednesday, Jerome Powell gave a speech to Congress. In particular, he gave an assessment of the rate of inflation, which in June updated a 13-year record, and voiced his opinion on the possible reduction of stimulus measures.

In principle, investors have not heard anything new for themselves. The Federal Reserve still insists that the price increase is a temporary phenomenon. Therefore, the regulator does not intend to rush to tighten its current rate yet.

Employment statistics also encourage people to maintain incentives. According to Powell, the American labor market is currently going through hard times, slowly recovering from the pandemic.

However, the latest data on the number of initial applications for unemployment benefits in the United States resonate with the opinion of the head of the Federal Reserve. Last week, the indicator decreased by 26 thousand and amounted to 360 thousand. This is the minimum value (since March last year, when the "coronavirus" crisis began).

Considering all the contradictions that are associated with the assessment of inflation and the situation on the labor market, AvaTrade analyst Naeem Aslam believes that the chairman of the US Federal Reserve has eased concerns about raising interest rates only for a short period. At the same time, the slightly more distant future is still uncertain.

A similar opinion is expressed by the head of GoldCore, Stephen Flood:

According to Flood, we cannot be completely sure that in the third quarter, the US regulator will not start tapering asset purchases. He added, "but it is likely that the Fed, and other central banks, such as the ECB, will remain behind the inflation curve."

The expert notes that this state of affairs should have a positive impact on gold quotes, as it has been happening in recent days. The characteristic of inflation as a temporary phenomenon, which was given by the head of the Fed, once again led to a rise in the price of the yellow metal.

Meanwhile, investors continue to evaluate the comments of Powell, who promised to continue supporting the economy. Against this background, on Friday morning, the yield of US Treasury bonds shows a positive trend.

The indicator, which mainly declined in the past and current weeks and thereby supported bullion, is now putting strong pressure on them.

So, (at the time of preparing the material) gold fell to the level of $1,826.3. As a result, the difference from yesterday's trading was $2.7, or 0.15%.

Gold is like on a trampoline: it will jump, then fall

Silver also suffered losses. On Friday morning, its price fell by 0.02%, reaching $26.39, while yesterday, the metal ended the day with an increase of 0.5%.

Analysts of Zaner emphasize in their daily report that it is difficult to single out any one key factor that contributed to the growth of precious metals this week. They attribute the current rise to the negative dynamics of bond yields, uncertainty about the future course of the US Federal Reserve, as well as the active spread of the delta coronavirus strain in the world.

Analyst InstaForex
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