Snippet12 Jan 2022 14:11
...... Investing.com - Gold longs’ bet to win the race against inflation seems to be on.
Gold futures’ most active contract on New York’s Comex, February, settled up $19.70, or 1.1% at $1,818.50 per ounce on Tuesday to advance across the key $1,800 support level ahead of the release of the latest reading on U.S. inflation. It was the third consecutive rise for Comex gold, which has gained 1.6% over the stretch.
Expectations are high that the Consumer Price Index for December will show another spike after the 6.8% jump in the year to November, which already represented the fastest price growth in 40 years.
Gold is touted as an inflation hedge and it is reinforcing that label by holding to a decent support level since the start of 2022. It failed that hedge mission several times last year as its rivals — the dollar and U.S. Treasury yields rallied instead of expectations of U.S. rate hikes.
“The reason why gold will outperform is not a clear one, but it seems unlikely that the back-end of the Treasury curve will see yields go significantly higher once we get past the first couple of Fed rate hikes,” said Ed Moya, analyst at online trading platform OANDA. “The longer gold stays above $1800 the more annoyed the shorts will become.”
The United States will likely have more interest rates over time if inflation continues to exceed forecasts, Federal Reserve Chairman Jerome Powell said Tuesday as the central bank prepared for its first rate hike since the COVID-19 pandemic that upended the economy two years ago.