Precious gold blows past $1,900 psychological knob as US inflation soars

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Precious gold blows past $1,900 psychological knob as US inflation soars

On Friday, the precious safe-haven yellow metal, gold futures, had retrieved a critical psychological handle of $1,900 per ounce, as a gauge of underlying US inflation had ticked up 3.1 per cent on an annualized basis, marking up the largest annual gain since 1992, with US Consumers Prices rising as much as 0.7 per cent last month.

In point of fact, in the day’s global commodity market, the safe-haven bullion widely contemplated as a hedge against a higher inflation, dipped as much as 0.8 per cent in early-morning trading, but rebounded sharply after release of US inflation data, as the US Federal Reserve had reaffirmed its stance on a near-zero borrowing cost and had agreed not to taper off fiscal supports for the economy.

In point of fact, earlier in the US trading hour, the US Commerce Department said that US Consumer prices index surged 0.7 per cent in April, while the US core PCE (Personal Consumption Expenditure) had vaulted a 3.1 per cent in gains over the twelve months through April this year, well above the US Fed’s target of 2 per cent, eventually helping the spot gold futures’ prices to regain its safe-haven bid.

Aside from that, a weakening US Dollar followed by the release of inflation data bode well for the bullion, too.

Gold prices charter above $1,900 an ounce as US inflation soars

Citing statistics, in the day’s commodity market wind-down, spot gold futures’ prices gained 0.3 per cent to $1,902.27 an ounce after plunging as much as 0.8 per cent earlier in the day, while US gold futures rose 0.4 per cent to $1,905.30 per ounce.

On the week, spot gold futures’ prices had secured a weekly percentage gain of 1.1 per cent, marking up their fourth straight weekly gains. Among other precious metals, palladium gained 0.8 per cent to $2,827.04 an ounce.

Meanwhile, referring to a sharp rise in domestic demand that could be justified by a sharp increase in personal consumption data alongside a supply restrain rocketing US inflation more than 3 per cent on an annualized basis for the first time since 1992, a director of metals trading at High Ridge Futures, David Meger said, “We saw a slight uptick in the personal consumption data...

All these things continue to support an underlying inflationary environment that is very favourable towards gold.