Spot gold steadies as traders sit on the sideline

October 22, 2021 - 1 month ago
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On Friday, the precious yellow metal prices steadied after a choppy session trade on Thursday, as inflation worries continued.

While spot gold is often considered an inflation hedge, reduced stimulus and interest rate hikes push government bond yields up, raising the opportunity cost of holding non-yielding bullion.

On Thursday, a top U.S. Federal Reserve official warned that extended high inflation through next spring could force the central bank to consider raising interest rates sooner than anticipated.

U.S. traders are now pricing a full rate hike into the Fed’s September policy meeting next year.

As eyes hold on the US Dollar, market bulls at present appear to be attempting to push spot gold to $1,800, which may again initiate much volatility, as another rejection may be looming.

Viewing the topside, the resistance (cap) is now considered at $1,795-$1,802. Reassess from there.

Conversely, the bearish (major) trigger level is located at $1,748.

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