Gold Set for Growth on Inflation Surge

Inflation Surge Whips Up Gold Prices

Gold prices surged nearly to a five-month high last week after official figures revealed that inflation in the US remained rampant.

According to the US consumer price index (CPI) released last week, the country’s consumer prices grew 6.2% year-on-year in October, the biggest inflation surge since December 1990. It also exceeded market expectations of 5.9%.

Core CPI, excluding food and energy, rose 4.6% annually, the fastest gain in more than 30 years.

The escalating inflation successfully drove the price of the yellow metal higher. On Nov. 10, gold prices rose as much as 2% to peak at $1,863.9 per ounce, hitting its highest level since June.

Gold prices edged higher to $1871.3 on Friday and later closed at $1,868.5 an ounce, meaning gold rates have been surging for two weeks straight. Receive latest price updates on gold and other precious metals

Fed Signals that Interest Rate Hike Is Off the Table Until 2022

While tapering often signals the beginning of an interest rate hike, Fed Chair Powell assured that the Fed is holding the benchmark interest rates at near zero. Stay alert and watch the news closely

He cited “maximum employment” as the major mandate for any interest hike, and the Fed is getting closer to meeting its goals on inflation and employment.

He said the first rate hike might occur in 2022 at the earliest, which is uplifting news for gold.

Gold Price Forecasts by Wall Street Analysts

Analysts expect gold to maintain its bullish momentum until mid-2022. Precisely, Goldman Sachs is looking for $2,000 for gold, while Soc Gen predicts gold prices to linger near $1,950 an ounce early next year.

Conversely, Morgan Stanley is less optimistic, saying that gold could experience a challenging environment next year. Its base case for gold is $1,675 per ounce for the first quarter of next year.

This article is prepared by Lucia Han from Mitrade and is for reference only. We do not represent that the material provided here is accurate, current or complete. The article content neither takes into account your personal investment objects nor your financial situation, and therefore it should not be relied upon as such. You should seek for your own advice.