The risk of stagflation has increased again because the impending energy crisis reinforces previous fears about inflation. Analysts said that this is good news for gold, which showed strong buying interest below $ 1,750 an ounce this week.
After declining to the level of $ 1,720 an ounce in the middle of the week, gold quickly rebounded to $ 1,760 on Friday.
The initial pressure on gold came as markets were preparing for the Fed's tightening in November. This led to higher yields on US Treasury bonds and the US dollar.
However, the growth in the gold's price at the end of the week showed that the game with it is far from over, as renewed concerns about stagflation and new prospects look very promising for the yellow metal.
According to the Co-Director of Walsh Trading, Sean Lusk, gold ended a turbulent week with an optimistic mood.
"The US dollar is taking a break, and bond yields are falling again. But there will be another inflationary pressure. There are many supply chain problems." he said.
The debt ceiling debate will also continue this week. Despite the fact that the US government avoided a partial closure on Thursday at the federal level when the Senate and House of Representatives passed legislation to preserve government funding until December 3, the default deadline of October 18 is still putting pressure on the markets.
The growth in US Treasury bond yields, as well as the US dollar, were the main obstacles for gold. And although the US government did not stop work last week, the threat of default still exists as the heated debate on the debt ceiling continues.
