Gold futures closed higher on Wednesday (Feb. 9), helped by the dollar’s depreciation and a drop in U.S. bond yields. In addition, expectations of a further increase in the rate of inflation are helping the price of gold at the moment.
- The gold futures were up $8.70, or 0.5%, at $1,836.60 an ounce.
- Silver futures were up 14 cents, or 0.6%, at $23.341 an ounce.
- The platinum contract was up $1.1, or 0.1%, at $1,037.40 per ounce.
- Palladium was up $20.90, or 0.9%, at $2,285.10 an ounce.
Gold futures rallied to close above $1,830 after a weaker dollar made gold more attractive to holders of other currencies.
The dollar fell 0.15% against six major currencies in a basket of currencies to 95.4950, and the yield on the 10-year U.S. Treasury bond fell to 1.925%.
The main focus remains on the Consumer Price Index (CPI), a key Fed measure of inflation, which will be released today.
Expectations are for a further increase in the inflation rate after inflation jumped to 7.0% last month, which has not been seen in over 40 years. Rising inflation figures with interest rates close to 0 continue to keep real interest rates in far negative territory. This is the main bullish factor for gold prices.
With strong labor market numbers behind them, a further increase in inflation could prompt the Fed to raise interest rates slightly. The bets go from a rise of 0.25% to 0.5%. At the same time, the markets must also continue to be monitored, as at the moment there is a switch from growth stocks to value stocks. This is mainly shifting the big money of financial institutions and investment funds. Analysts assume that this could take up to 12 months, which would probably persuade the Fed to raise interest rates slowly over the period of 12 months.
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Thursday, February 10, 2022