The world’s largest economy’s strong inflation report puts pressure on gold. These losses followed the disappointment of the early Fed rate decreases in March and May because of robust US inflation data, and they happened as pressure from higher US 10-year Treasury yields intensified.
High inflation data usually cause a negative bias towards gold, as it raises the possibility that interest rates will remain high, increasing the opportunity cost of holding the non-yielding metal. Gold has fallen to support levels of about $2000 per ounce as speculators consider the ongoing reports on US inflation.
The yellow metal’s price action confirms that it has broken above the $2017 level, which it closed below yesterday. It is now under bearish correctional pressure once more and is headed to the $1988 support level, which is 50% of the Fibonacci level, for the rise from $1810.33 to $2144.59. This level is essential to remember because breaking it will drive the price to the next correctional level, which is $1938 per ounce.
For a more extended period, the Federal Reserve kept interest rates between 5.25% and 5.50%, but the inflation data has shown to be higher than expected. Last week, several Fed speakers issued cautions, stating that the bank was not in a haste to cut interest rates because of worries about sticky inflation. During this time, the dollar jumped to three-month highs, which put pressure on gold.
Over time, the precious metal has shown to be a trustworthy and valuable asset despite the ever-changing investing world. After all, conventional investors consider the golden brilliant metal to be a reliable store of wealth. The unique benefits of gold, such as its ability to ward against inflation and lower the risk involved with other financial assets, may also entice investors.
These unique benefits are likely the reason for the recent year-long spike in interest in gold investing. More people will probably consider investing in the precious metal due to the recent increase in gold prices, which makes gold investing quite enticing. Gold is unique among assets because its inherent value is closely associated with its scarcity. Unlike other currencies, the supply of gold is finite. Because of its rarity, this precious metal is a more appealing option for investors.
