Gold continued trading higher on Wednesday, as rising inflation rates and mounting geopolitical tensions support the price of gold. An escalation of the Russia-Ukraine crisis might boost the price of gold, as investors might turn to safe-haven assets. Geopolitical tensions might also drive the price of other commodities up, especially energy-related assets. The EU threatens Russia with heavy economic and trade sanctions in the event of an attack against Ukraine, which might backfire though, and have a heavy impact on the Eurozone. The EU relies on Russia for key commodities, such as wheat, natural gas and oil, and the price of these goods is already increasing. A disruption in importing these commodities would likely result in rising prices, increasing inflation rates in the EU. The increase in oil price in recent months has also been driving inflation up, benefitting gold prices, as the metal is often used as an inflation hedge.
Gold price climbed on Wednesday, breaking through the $1,829 per ounce resistance and climbing up to $1,835 per ounce. If the price of gold continues its ascend, it may find further resistance at $1,853 per ounce, while if it decreases, support may be found at 1,782 per ounce.
On Thursday, the US bond auction will be held, which will display the value of US bond yields and is likely to affect the price of gold. In addition, monthly CPI and Core CPI indicators are scheduled to be released for the US. These are key inflation indicators and may affect the price of gold, as they may help traders gauge the Federal Reserve’s fiscal policy in the coming months.
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