On Monday, the precious safe-haven yellow metal, gold futures’ prices had stretched out their latest leg of meteoric rally, snatching up the largest monthly percentage gain in more than 10 months, as a sharply weakening American currency had reported a second straight month of declines with inflationary pressures lifting the bullion’s safe-haven appetite.
In point of fact, latest upsurge in gold futures’ prices came against the backdrop of a growing inflationary pressure that appeared to have sapped the greenback’s safe-haven appeal with US 10-year Treasury notes faltered to 1.59 per cent last week.
Casting further glooms on US Dollar, US Commerce Department data had shown later last week that US inflation shot up to 3.1 per cent in April, well above the US Federal Reserve’s target of 2.0 per cent, and had clocked its largest annual gain since 1992 over past twelve months through April.
Aside from that, although US Fed Chair Jerome Powell had reiterated that a latest uptick in inflation indicators would likely to be shortlived, market participants turned a deaf ear amid fears of what could be a prolonged period of higher inflation, eventually restoring the bullion’s stance as a hedge against higher inflation.
Gold futures gobble up gains as US Dollar weakens
Citing statistics, in the day’s commodity market round off, spot gold futures’ prices had wrapped up the day 0.3 per cent higher to $1,907.90 an ounce, while US gold futures fathomed up 0.2 per cent to settle down at $1,909.50 per ounce.
On the month, both contracts had soared roughly 8 per cent. Among other precious metals, platinum rose 0.7 per cent to $1,185.85, while silver futures’ prices gained 0.6 per cent to $28.05, remarking their largest monthly percentage gain since December last year.
Meanwhile, referring to US Fed’s dovish monetary policy, a Commerzbank analyst Carsten Fritsch said in a client note, “For as long as the Fed refuses to change its monetary policy in response to rising inflation, real interest rates will continue sliding ever further into negative territory, which is good news for gold”.