At 09:21 GMT, XAU/USD $ 3072.16, an increase of $ 15.55 or +0.51%.
Rates and inflation expectations push gold above $ 3,000
The wider market is starting to praise in the inflationary impact of rates. FED officials are divided on the effect-Boston Fed President Susan Collins expects an inflation peak in the short term, while Alberto Musalem of St. Louis Fed warns that it can continue to exist. His team estimates that the rates can add more than 1 percentage point to inflation.
Today’s PCE data – expected to show a monthly increase in core inflation of 0.4% – cannot fully capture the inflation that still has to come. That gives gold added momentum while inflation picks up hedging. Core inflation is expected to be higher to 2.7% on an annual basis, strengthening the cautious attitude of the FED and reducing the chance of speed reductions in the short term.
FED policy uncertainty adds fuel to bullish golden setup
Gold thrives in periods of policy uncertainty and weakening the growth expectations. Business investments and recruitment are reportedly delayed under the current US policy conditions. Thomas Barkin of Richmond Fed compared the environment with “zero visibility”, and consumer power falls as the fears of inflation rise.
Despite the current “moderately limiting” attitude of the FED, traders see little reason for immediate relaxation, especially with the details of February lagging behind in recent developments. That sets real rates and inflation expectations straightforward for gold.