Gold at a two-week high

Friday 11 February 2022

In this week's market report:

• Au reaches highest level in two weeks

• US inflation surges higher

• Central Bank of Ireland buys even more gold

Dear Investor,

US dollar gold price [XAUUSD] Daily chart

Source: Trading View
(Click to enlarge)

Another strong week for spot gold: Another strong week for spot gold, with Au up 1.25% for the week to US1,826. Gold moved through a previous point of resistance overnight (US$1,830s), with an intra-session high of US$1,841.

Au reaches highest level in two weeks: Spot gold reached its highest level overnight in two weeks as inflation soared to a 40 year high. Director of metals at High Ridges Futures, David Meger said:

‘A rising interest rate environment does nip at the heels of the gold market.
‘However, the other side of that coin is a confirmation of the ongoing inflationary trend that we believe is the underlying fundamental push behind gold's recent move.’ More below.

Gold and silver up, platinum and palladium down: Silver and gold rallied this week, with platinum and palladium both falling:

• Silver enjoyed a strong rally, up 3.49% to US$23.20 per ounce.

• Platinum is down by 0.70% to US$1,030 per ounce.

• Palladium is down 3.20% to US$2,249 per ounce.

Australian dollar gold price steady at AU$2,550: The Australian dollar gold price is up 0.94% this week to AU$2,550 per ounce. The Aussie dollar is slightly up (0.38%) this week muting spot gold’s rise.

Bulls, if gold breaks above US$1,844 get ready for more: ABC Bullion Global General Manager Nick Frappell told Kitco overnight, that he sees gold ‘__more or less unchanged within the coming week – ie rangebound, unless there is a serious development on the Russia–Ukraine front’. Though Nick added ‘If gold breaks above US$1,844, look for US$1,863’__.

Bears, look out below: Nick also warned readers recent gold price action has been at the top resistance level of the Weekly Ichimoku Cloud. Higher inflation numbers in the US point to potentially aggressive rate hikes from the Fed, says Nick and ‘implies a move back towards the lower part of the recent range, with support at US$1,817 and on to US$1,800’.

US inflation surges higher: The consumer price index in the US jumped 0.6% in January, bringing year on year (yoy) inflation to 7.5%

• This is the biggest increase since February 1982 - higher than the expected 7.2%.

• Core inflation (minus food and petroleum) rose to 6% yoy - expected was 5.9%.

• CME data now suggests 0.50% rate increase at Federal Reserve Bank March meeting is probable.

Fed may force a recession says Bloomberg: Entrenched inflation and a lack of promising signs in recent US labour data may put the Federal Reserve Bank in a ‘no-win’ situation writes Bloomberg:

‘Traders also now expect a full percentage point of increases by the end of July, according to Bloomberg News. Moreover, the difference between short- and long-term bond rates — better known as the yield curve — continued to collapse.
[…]
‘What all this means is that the markets increasingly see the only way for the Fed to get inflation under control is to engineer a sharp slowdown in the economy, and perhaps even force a recession. This would be the hard landing that policy makers have wanted to avoid.

Central Bank of Ireland buys even more gold

From Health Wealth Gold:

‘Ireland bought gold bullion bars stored in the Bank of England, for a fourth consecutive month in December 2021 as seen in the latest IMF data and once again unreported in Irish media.
The Central Bank of Ireland added another 0.7 metric tonnes, taking full-year net purchases to 3.5 tonnes and national gold reserves have risen to 9.5 tonnes which are about 4% of their total foreign exchange reserves.
‘The Irish institution added 1 metric tonne of gold in September 2021. This was Ireland’s first increase since 2008 when they added 0.5 metric tonnes.'

Inside our office this week…

This week, ABC Bullion Gold Tael Cast Bars have been very popular with our clients, no doubt celebrating Lunar New Year. In addition, investors have been quick to purchase the 1oz Krugerrand Minted Silver coins.

Until next time,

Shae Russell
Group Communications Manager, 
For ABC Bullion

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