Gold prices rose after the US Treasury Bond Yield fell from a peak of 2%. Currently, the market is also highlighting the issue of rising US interest rates after the latest inflation releases.
Gold prices rose in the trading session on Friday (11/February) this evening thanks to a decline in US Treasury bond yields. However, the recent rise in US inflation has fueled a hawkish view from a Fed official. At press time, spot gold was up 0.4% at $1833.49 an ounce, gold futures prices were slipping 0.1% to 1835.40, while XAU/USD was up 0.71% to $1839.68.
After peaking at 2% for the first time in three years, the 10-year US Treasury bond yield fell to 1,919%. According to analysis by Philip Streible of Blue Line Futures in Chicago, bond yields are actually just slipping. Even so, this is enough to support the recovery of gold.
"The gold market is just waiting for the Fed to hike," said Daniel Pavilonis, analyst at RJO Futures. He added that gold has been trading range-bound around the $1800 pivot and is forming technical support at that level.
Bullard Wants 100 Bps Rate Increase
Last Thursday, the President of the Fed for the St. Louis, James Bullard, said that he had turned more hawkish amid the current heating up of inflation. With the highest inflation growth on record in 40 years, Bullard wants interest rate hikes to 100% in the next three FOMC meetings.
"I'd like to see a hike (rates) of up to 100 bps through July 1," Bullard said in an interview with Bloomberg News.
For information, the US Consumer Price Index (CPI) grew 0.6% in January 2022, better than the market forecast which previously expected a 0.4% decline. Analysts do observe the urgency of tight monetary policy to respond to rising inflation, but they don't really take into account Bullard's outlook.
"There's been a lot of discussion about the possibility of an emergency rate hike. But despite the strong talk of raising rates, other Fed officials downplayed Bullard's hawkish stance," said Philip Streible.
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