Bullion prices show a confident positive trend on Monday morning. Demand for the precious metal is growing amid increasing geopolitical and inflationary risks.
Recall that the last trading week was shortened and ended on Thursday. The markets were closed on Friday due to the Easter holidays.
In four working days, gold has risen in price by 1.5%. This is the second consecutive weekly increase in the yellow asset.
The rise in quotes was facilitated by the acceleration of annual inflation in the United States to a new 40-year high. In March, the indicator jumped to 8.5%.
Geopolitical tensions also provided support. Now both Russia and Ukraine doubt the effectiveness of the peace talks.
The value of the precious metal rose despite the hawkish rhetoric of the Federal Reserve. The record level of inflation in America has increased the probability of the next increase in interest rates by 50 bps.
The course for a more drastic tightening of the Fed's policy is the driver of the growth in the yield of 10-year US Treasury bonds.
This morning, the indicator jumped to the highest level since December 2018 and amounted to 3%.
The precious metal continues to ignore the increase in profitability. Bullion showed spectacular dynamics at Asian trading on Monday.
At the time of release, gold futures soared 0.7% to a 5-week high of $1,987.70. The last time the asset traded at such a high level was on March 14.
Meanwhile, the value of other precious metals has also increased. Silver rose 0.7% to $25.87, platinum – 1.2% to $1,001.57, palladium – 1.6% to $2,406.85.
The increase in demand for gold is taking place against the backdrop of escalating geopolitical tensions. On Sunday, Ukrainians surrounded by Russian troops refused to lay down their arms and surrender Mariupol.
The aggravation of the military conflict increases the possibility of the European Union imposing an embargo on Russian gas. There is also a growing threat of a number of restrictions on the supply of oil to Europe from Russia.
These risks on Monday morning strengthened the positions of both commodities. The increase in gas and oil prices immediately inflated the demand for gold as a protective tool against accelerating inflation.
Now, when anti-risk sentiment reigns again on the stock markets, the yellow asset has a great chance to break through the psychologically important mark of $2,000.
This threshold represents the level of least resistance for bullion compared to $2,100. Outside of $2,000, there are several significant peaks that will need to be overcome in order to enter a long-term bullish trend.
