- Gold returns to close to the May highs as buyers continued to pile in amid underlying geopolitical tensions.
- Robust central-bank demand is a key factor in keeping the precious metal bid.
- After a deep correction, XAU/USD resumes its uptrending bias and pushes higher.
Gold price (XAU/USD) trades higher on Wednesday, up by over half a percent in the $2,370s, as continued hoarding by central banks on the back of simmering geopolitical tensions drives demand.
The upside could be capped, however, by comments by the Federal Reserve (Fed) Chairman Jerome Powell, who suggested higher interest rates are here to stay, keeping the opportunity cost of holding the non-yielding precious metal unattractively high.
Gold price creeps higher on the back of sustained demand
Gold price creeps higher on Wednesday as the demand outlook for the precious metal remains buoyant amid continued geopolitical and global trade tensions. Central banks, particularly in emerging markets, have been hoarding Gold in recent years as a hedge against the risk of sanctions imposed by the West, according to Gita Gopinath, the First Deputy Managing Director of the International Monetary Fund.
This trend of central banks increasing their Gold holdings as a hedge against economic and geopolitical uncertainties is likely to persist, indicating a sustained demand for Gold in the foreseeable future.
US inflation data on tap
Gold prices are sensitive to US economic indicators, particularly the Consumer Price Index (CPI) data. An increase in inflation, reflected in the CPI data, could lead to the Federal Reserve maintaining or increasing interest rates, which could negatively impact the price of Gold.
Recent comments from Federal Reserve Chairman Jerome Powell suggest a shift in stance towards maintaining higher interest rates to combat inflation. This change in policy direction may pose a challenge for Gold prices as they continue to climb.
Technical Analysis: Gold price recovers after backslide
Gold price (XAU/USD) has bounced back to near the May highs at $2,379, supported by an uptrend after a recent correction.
XAU/USD 4-hour Chart
With a positive trend in the short-term and medium to long-term charts indicating bullish sentiments, Gold is likely to continue its upward trajectory towards the next target at $2,400.
Economic Indicator
Consumer Price Index (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM figure compares the prices of goods in the reference month to the previous month. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
- Gold returns to close to the May highs as buyers continued to pile in amid underlying geopolitical tensions.
- Robust central-bank demand is a key factor in keeping the precious metal bid.
- After a deep correction, XAU/USD resumes its uptrending bias and pushes higher.
Gold price (XAU/USD) trades higher on Wednesday, up by over half a percent in the $2,370s, as continued hoarding by central banks on the back of simmering geopolitical tensions drives demand.
The upside could be capped, however, by comments by the Federal Reserve (Fed) Chairman Jerome Powell, who suggested higher interest rates are here to stay, keeping the opportunity cost of holding the non-yielding precious metal unattractively high.
Gold price creeps higher on the back of sustained demand
Gold price creeps higher on Wednesday as the demand outlook for the precious metal remains buoyant amid continued geopolitical and global trade tensions. Central banks, particularly in emerging markets, have been hoarding Gold in recent years as a hedge against the risk of sanctions imposed by the West, according to Gita Gopinath, the First Deputy Managing Director of the International Monetary Fund.
This trend of central banks increasing their Gold holdings as a hedge against economic and geopolitical uncertainties is likely to persist, indicating a sustained demand for Gold in the foreseeable future.
US inflation data on tap
Gold prices are sensitive to US economic indicators, particularly the Consumer Price Index (CPI) data. An increase in inflation, reflected in the CPI data, could lead to the Federal Reserve maintaining or increasing interest rates, which could negatively impact the price of Gold.
Recent comments from Federal Reserve Chairman Jerome Powell suggest a shift in stance towards maintaining higher interest rates to combat inflation. This change in policy direction may pose a challenge for Gold prices as they continue to climb.
Technical Analysis: Gold price recovers after backslide
Gold price (XAU/USD) has bounced back to near the May highs at $2,379, supported by an uptrend after a recent correction.
XAU/USD 4-hour Chart
With a positive trend in the short-term and medium to long-term charts indicating bullish sentiments, Gold is likely to continue its upward trajectory towards the next target at $2,400.
Economic Indicator
Consumer Price Index (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM figure compares the prices of goods in the reference month to the previous month. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
