The price of gold approached its highest level since January on Tuesday, close to erasing this year’s decline as investors turn more bullish on the precious metal.
Spot gold was trading at $1,880.31 per ounce in London. Last week the prices reached their highest since January 8, climbing to $1,890.13.
The price growth comes as investors are weighing comments made by the US Federal Reserve about inflation.
Governor Lael Brainard, Atlanta Fed President Raphael Bostic and St. Louis’ James Bullard said they would not be surprised if supply shortages push prices up in the coming months as the world recovers from the pandemic and pent-up demand is unleashed. They added, however, that much of the price gain should prove temporary.
“Fed speak continues to support the idea that inflation in the US will be transitory and that is good enough to keep short-term bullish momentum in place for gold,” Edward Moya, senior market analyst with Oanda Corporation, told Bloomberg. “Gold continues to face resistance from the $1,900 level, so if the dollar stabilizes over the next couple of sessions, bullion might remain steady.”
Some analysts also say that the crash in bitcoin and other cryptocurrencies has provided support for the gold price.
“The steep correction in cryptocurrencies has led to asset rotation to gold. We expect this to extend support to global gold prices,” said Sugandha Sachdeva, vice president, commodity & currency research at Religare Broking. “We expect gold prices to catch up with other commodities, which are currently in the super cycle mode,” she added, as quoted by livemint.com.
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