Bullion bulls once again defied those doubters who believe gold might be about to reclaim $1,900 after two days of losses.
On Wednesday, December gold futures settled almost 1% higher to $1,870 an ounce, the most active contract.
On Tuesday, the yellow metal bounced off of the $1,875 resistance level. The price of bitcoin found support at $1,850 at midnight on Wednesday, ending the subsequent decline. The price has recently bounced between round price levels.
Gold bulls also received some vindication since the start of the week, when they appeared on softer ground.
Gold may appear a bit stretched in the near term, but the path could be relatively straightforward. It is possible that there may be a couple of bumps, but otherwise, it should be mostly straight up if the breakout is real, and there is no reason not to believe this at this time
Bullion has always been considered a hedge against inflation. The bullion market wasn’t able to live up to that billing earlier this year as intense speculation that the Federal Reserve would be forced into a rate hike quicker than expected sent Treasury yields and the dollar up instead, depressing bullion prices.
Following Fed Chair Jay Powell’s assurance earlier this month that any rate hike will only come in the second half of next year, that trend has slightly abated.
Last week, the Labor Department reported that the Consumer Price Index, which measures prices across a wide range of products from groceries to gasoline, rose 6.2% in the year to October.
Mostly due to pump prices of fuel running at seven-year highs, the CPI posted its fastest growth since November 1990.
Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. He is a Member of the Chartered Financial Analyst Society.