The Magazine for Asian Investors
Gold prices rose 0.4% yesterday (December 10) in the wake of the release of U.S. inflation figures. In addition, the increase was supported by a weaker dollar and the lower yields on U.S. Treasury bonds.
- Gold rose 0.4% to close at $1,784.20 per ounce.
The publication of the U.S. CPI figures let the gold prices yesterday again rise after the CPI had climbed to the highest level in 40 years. A weaker U.S. dollar also increases the attractiveness of holding gold for holders of other currencies. Even though yields on U.S. Treasuries have been weaker, the main point for stronger gold prices is real interest rates, which slip further into negative territory as yields fall and inflation rises.
According to the U.S. Department of Labor, the consumer price index (CPI) rose 6.8% in November from a year earlier, the highest level since June 1982.
Core CPI excluding food and energy rose 0.5% in November from the previous month and 4.9% from a year earlier, the highest level since June 1991.
With U.S. inflation figures running hot, eyes are now back on the Fed and its monetary policy meeting on December 14 and 15. Calls for a rise in interest rates and tighter monetary policy are growing louder. This increases the pressure on the decision-makers who were wrong with their inflation policy, not the first time.
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Saturday, December 11, 2021