The alert attitude of Fed officials amid the potential rate hike and tensions in Ukraine made the US dollar weaken and raised gold prices.
Gold prices rose little by little, driven by the weakening US dollar and the conflict in Ukraine. Spot gold prices rose 0.2% to $1800.36 an ounce, while gold futures prices jumped 0.3% to $1801.50. As of writing on Wednesday (02/February) morning, XAU/USD is trading at $1801.31.
Last Tuesday, Fed officials showed a more dovish attitude after the announcement of plans to increase interest rates in March. "We are indeed heading for an increase (interest rates) in March. However, after that, I want to see the data that will be released ... let's go through Omicron and conditions in general and then see the results," said the President of the San Francisco Fed, Mary Daly.
The US Dollar Index also weakened and provided a gap for bullion demand. According to David Meger of High Ridge Futures, the Fed's more cautious display amid potential interest rate hikes tends to make the US dollar weaker and commodity prices rally quite significantly.
Meger also warned to keep a close eye on developments in the conflict in Ukraine. Earlier this month, with European support, Ukraine announced plans to increase its armed forces in the face of Russian pressure.
Knowing this, Russia suspects that the Western bloc is deliberately waging war drums. Russian President Vladimir Putin said the West had deliberately created a scenario that led to war and ignored Russia's security authority over Ukraine. "Russian-Ukrainian tensions continue to support safe-haven demand," commented Meger.
Next, investors will pay attention to the US Non Farm Payroll data which will be released this Friday. The TD Securities analyst team wrote that the weaker-than-expected employment data probably won't shake the Fed's hawkish sentiment. The US central bank may only assume that the weakening is related to the surge in Omicron cases.
Post a Comment for "Gold Price Returns Above 1800 Thanks To Weakening USD "