Gold prices have stabilised above $1,800 per ounce amid rising inflation and 10-year US treasury yields spiking above two per cent.
Bullion has continued its recovery from sharp drops in late January amid looming fears of US interest rate hikes, with gold now trading at $1,827.
While those concerns have not died down, with expectation of multiple interventions from the Federal Reserve, general market volatility is proving beneficial for a perceived ‘flight to safety asset’ as investors become increasingly bearish.
Following news inflation rates had reached 7.5 per cent Stateside, US gold jumped to $1.840, before slowing down in the evening, once the US dollar recovered against the euro and a large majority of currencies.
Carlos Alberta Da Costa, external market analyst at Kinesis Money said: “We should note that rising inflation and the return of positive yields could be challenging also for precious metals. But so far investors are still trusting gold, which could be an interesting hedging in case of market disruption. In this scenario, gold is also representing a hedge in case central banks would not be able to contain inflation. “
Commenting on gold’s performance across the month, Craig Erlam, senior market analyst at OANDA said: “It’s been a good February so far for gold, which has now recorded seven days of gains in the last eight. The rally appears to be running a little low on momentum though, which is perhaps not surprising considering the inflation data that’s due today and the fact that it’s trading around a key resistance level.”