At the time of writing, the gold price is trading at $1,975 and has stuck to a tight $1,974 and $1,979 rang. The US dollar was also firm against most currencies most notably the yen. The DXY index was at 100.953, for a fresh two-year high.
More hawkish comments from Fed officials have reinforced expectations for faster US policy tightening. New York Fed President John Williams said last week that a half-point rate rise next month was “a very reasonable option,” in a further sign that even more wary policymakers are on board with faster monetary tightening.
In the meantime, Fed member James Bullard spoke on Monday and offered further insight on the outlook for Fed policy. Bullard is one of the bank’s most hawkish and has called for interest rates to reach 3.0% this year. US inflation is “far too high,” he said on Monday, repeating his case for increasing interest rates to 3.5% by the end of the year to rein in inflation expectations and slow what are now 40-year-high inflation readings.
He said that the Unemployment Rate can continue to fall even with sudden rate hikes, repeating his view that unemployment, now at 3.6%, will go below 3% this year.
This all comes ahead of the Fed Chair Jerome Powell later this week, where he is expected to solidify expectations for a 50-bps rate hike at the coming Fed policy meeting.
XAUUUSD prices soared to a five-week high aside from USD strength amid fears of more sanctions. ”Increasing likelihood of a European Union embargo on Russian gas could see inflation staying high, supporting gold demand as an inflation hedge,” analysts at ANZ Bank said. ”ETF flows continued to be strong, with total holdings rising to a 14-month high of 106.6 million ounces.”
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