Gold Bugs Tremble On High Inflation

Gold prices declined at the first trading session in London, retreating from the more-than-five-month high reached the previous session.

At the time of writing, gold futures were near $1860 an ounce but remained firmly above $1,800 price band.

Gold and the dollar normally move inversely, and both dropped on Monday, although the dollar remained close to a 16-month high

As evidence mounts that inflation will remain persistently above the Fed’s target of 2.0%, the JOLTs report is another confirmation.

Increased labor demand leads to higher wages, which in turn raises inflation. Just below $1,872, gold may challenge its previous weekly high.

Inflationary pressure continues to be monitored by investors. In a statement released on Sunday, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, said that although the Fed should not overreact to elevated inflation, it is likely a temporary phenomenon.

On Tuesday, these Fed Bank heads will speak separately: Thomas Barkin, Esther George, Raphael Bostic, and Patrick Harker.

The Fed is under increasing pressure to remove monetary stimulus faster (i.e., stop using the accelerator) which definitely weighs on the precious metal negatively.

Mary Daly, president of the Federal Reserve Bank of San Francisco, and Fed Vice Chairman Richard Clarida will speak at the Asia Economic Policy Conference on Friday.

In the meantime, U.S. Treasury Secretary Janet Yellen said controlling COVID-19 in the U.S. will lead to reduced inflationary pressure. In addition, retail sales data will be released on Tuesday.

Inflation in the eurozone may fall more slowly than expected due to supply chain bottlenecks.

However, two members of the ECB’s policy committee cautioned the bank against overreacting and pulling back intervention too quickly.

While the Bank of England is set to hike interest rates for the first time in December, whether it will do so in December or in early 2022 has divided economists’ mindsets