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13.01.202216:12 Forex Analysis & Reviews: Gold is dropping in value amid release of US data

During Thursday's trading session gold is steadily declining. Experts in commodity trading named the increase in the US government bond yield to 1.754% from the previous close of 1.725% as the main reason for the yellow metal's decline.

Despite this fact, at the time of writing the article, gold is still near the price level of the weekly high of the previous day's session amid the ongoing decline of the US dollar.

Exchange Rates 13.01.2022 analysis

Thus, the spot gold sank 0.13% to $1,823 per troy ounce. The previous day, the yellow metal rose to $1,827, its highest level since January 5. Meanwhile, at the beginning of Thursday's trading session February futures were down only 0.05% to $1,826 per troy ounce, while March silver futures lost 0.09%, declining to $23.23 per ounce.

Another significant factor to support the growth of gold quotations was the publication of the data about the higher growth rates of the US consumer prices than it was forecasted. According to the latest data, last month the US consumer price index grew by 0.5% compared to November and by 7% compared to the same period in 2020. Moreover, the annual inflation growth was the highest since 1982.

Statistics released the day before bolstered market confidence that the US Federal Reserve would begin to raise interest rates and tighten monetary policy in March.

Gold is a traditional hedge against inflation. At the same time, the main precious metal is highly sensitive to rising US interest rates.

As for experts' outlooks, they are completely different. Some specialists believe gold might climb up to $1,845 in the near future. The precious metal will be able to reach this level, if it hits the daily close over $1,831. The scenario of permanent gold's growth will be possible in case of a slow increase in government bond yields, until the markets are confident in the inevitability of the Fed's tightening policy. However, it will occur only after some Fed's meetings.

Less optimistic analysts say that gold could fall below $1,810, which might extend to levels of $1,800, $1,786 and $1,770.

Irina Maksimova,
Pakar analisis InstaForex
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