Jakarta CNBC Indonesia – The world gold price in the spot market strengthened throughout this week, touching the psychological level of US $ 1,800 per troy ounce, amid rising inflation in the United States (US).
The selling price of the precious metal on the world spot market is priced at US$ 1,808.12 per troy ounce on Friday (12/25/2021) or up 0.58% or equivalent to US$ 10.44 per troy on, from Friday’s position. then worth US $ 1,797.68/troy ounce.
In fact, on the first two days of the week, asset prices were minimal risk (safe haven) was weakened, but then turned up on the third day (Wednesday), by 0.84% or equivalent to US$ 15 per troy ounce, to US$ 1,803.4/troy ounce.
For global investors, gold is a hedging asset that shines even more when inflation rises while benchmark interest rates remain low which makes US government bond prices less attractive because inflation erodes.
Personal consumption spending (personal consumption expenditures/PCE) in the US as of November was announced to be up 0.6% on a monthly basis, while on an annual basis it grew 4.7% or higher than market expectations at the level of 4.5%.
On the other hand, the US central bank (Federal Reserve / The Fed) has only said so far that it will only raise its benchmark interest rate as soon as March next year, leaving room for 6 months that inflation will rise without being offset by an increase in the benchmark interest rate.
For fixed income assets, high inflation is the main enemy that erodes investor returns. In last Friday’s trading, the yield (yield) US government bonds with a tenor of 10 years were at the level of 1.493% or strengthened compared to last Friday’s position at 1.407%. This means that prices are weakening.
In the midst of this decline in yields, US government bonds also tend to be less attractive when compared to promising gold return higher against inflation. The hunt for gold triggers price increases.
Reuters Commodity Analyst Wang Tao targets gold prices to be at US$ 1,815/troy ounce. “Gold price will try to test the point resistance US$ 1,815/troy ounce. Once broken, there is a chance to rise again towards US $ 1,830/troy ounce,” Wang wrote in his research.
CNBC INDONESIA RESEARCH TEAM
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