Economic news

Gold Pulls Back from Feb High as Inflation Fears Percolate

Gold prices were seeing lackluster trade Tuesday, edging lower but mostly holding near the highest levels since February, amid selling of assets considered risky, including global stocks and oil.

June gold was off $9.80 cents, or less than 0.5%, at $1,827.80 an ounce, after the precious metal rose 0.3% Monday, adding to a climb to the highest finish since Feb. 10, FactSet data show.

Some strategists are pointing to growing concerns that rising inflation in the U.S. and other countries could prompt the Federal Reserve to remove its easy-money policies sooner than expected in the aftermath of the COVID pandemic.

Data on Tuesday showed that prices at factories in China rose at the fastest pace in 3½ years in April. China’s producer-price index rose 6.8% last month from the period a year ago, the National Bureau of Statistics said.

Gold is viewed as a hedge against inflation but if concerns about pricing pressures causes the Fed to raise interest rates that could undercut appetite for precious metals which don’t offer a coupon and compete against U.S. Treasurys.

Still, the selling in global stocks, with the Dow Jones Industrial Average and the S&P 500 indicated lower on Tuesday, were helping to cap declines in gold, strategists said.

“The yellow metal remains supported by the risk-off mood in the market and the slightly softer tone surrounding the US dollar,” wrote Sophie Griffiths, market analyst at Oanda in a Tuesday note.

“Inflation concerns are being played out in the equities market,” the analyst wrote.

Trade in gold also was coming as oil prices were under pressure as investors weighed the impact of the Colonial Pipeline disruption, while 10-year Treasury yields were holding steady above 1.60% and the U.S. dollar, as measured by the ICE U.S. Dollar Index, was around the lowest level in 2 1/2 months.

Source: Marketwatch

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree