Gold prices traded higher on Wednesday, climbing almost to $1,950 per ounce. If the price of gold decreases, support may be found near 1,877 per ounce, while further resistance may be found around $2,000 per ounce. The price of gold is supported by global inflationary pressures, as well as by the conflict in Ukraine.
US Treasury yields retreated a little on Wednesday, after spiking on Tuesday boosted by reports of a shift in Fed’s fiscal policy towards a more hawkish direction. Real yields compete directly with gold, which is a non-interest-bearing asset, and their rise puts pressure on the price of gold.
During the past few weeks, the gold price had climbed up to $2,050 per ounce, its highest level since the peak of the pandemic, in August 2020. The war in Ukraine has triggered a risk-aversion sentiment, driving investors towards safe-haven assets. Diplomatic talks between Russia and Ukraine continue, sparking hopes of a de-escalation of the conflict. Negotiations have entered a more serious phase, as both sides seem to feel there is room for compromise, although so far, a solution does not seem near and gold price benefits from the ongoing crisis.
Sanctions against Russia have been driving commodities up, especially energy-related commodities, contributing towards rising inflation. The price of gold benefits from rising inflation, since it is often used as an inflation hedge. The effect of rising inflation on gold seems to be temporary though. Global inflationary pressures, increased by the war in Ukraine, are pushing major Central Banks towards a more hawkish fiscal policy. The Federal Reserve raised its benchmark interest rate by 25 base points last week, bringing its benchmark interest rate to 0.50%. The BOE followed suit a day later, raising its benchmark interest rate by 25 base points, to 0.75%.
The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.
as a Liquidity Provider
and reliable execution
Fill in the registration
form and click
Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.
When your live account is approved, you can deposit funds and start trading on your chosen platform!
The website you are now viewing is operated by TopFX Global Ltd, an entity which is regulated by the Financial Services Authority (FSA) of Seychelles with a Securities Dealer License No SD037 that is not established in the European Union or regulated by an EU National Competent Authority.
If you wish to proceed please confirm that you understand and accept the risks associated with trading with a non-EU entity (as these risks are described in the Own Initiative Acknowledgment Form and that your decision will be at your own exclusive initiative and that no solicitation has been made by TopFX Global Ltd or any other entity within the Group.
Don't show this message again
These cookies fall under the following categories: essential, functional and marketing cookies. Marketing cookies may also include third-party cookies.