Gold is At It’s Highest Level, Supported by Inflation Data

It was known that A stronger dollar makes gold less attractive for other currency holders, while higher U.S. interest rates and yields increase the opportunity cost of holding bullion, which is also used as a hedge against inflationary pressures. Recently, prices of Gold were flat at a three-month high based on data. In the trading session of Tuesday (15/November) tonight, spot gold prices stabilized at around $1,772.19 per ounce at 15:23 GMT.

Gold sometimes moves opposite to the U.S. dollar because the metal is dollar-denominated, making it a hedge against inflation. Meanwhile, gold futures slipped by 0.1% to $1,775.40 per ounce. XAU/USD occupied $1,768.0, although it slipped slightly but still near level's highest since August 15.

Like most commodities supply and demand is incredibly important, but gold also retains additional value. The United States Consumer Inflation released late last week was the latest data to have a high impact on market movements. Now, the market is wait-and-see on the Fed's monetary policy. That was done to confirm expectations of whether the Fed will put the brakes on the pace of their rate hikes. Inflation expectations continue to decline within people in the market.

USD Still Around Its Low Level

The terms low level or weak dollar and strong dollar are generalizations used in the foreign exchange market to describe the relative value and strength of the U.S. dollar against other currencies. Therefore, based on the situation above, The Fed is likely to reduce the pace of aggressive rate hikes. This was said by David Meger, an analyst at High Ridge Futures.

Additionally, Meger added that gold's position at a high level is also supported by the calm bond yield and the US Dollar which is still under pressure. The US Dollar Index is still moving in the range of three-month lows.

While base of the Feds official comments after the release of inflation data, it was also observed by the market. Most recently, Fed Vice Chairman Lael Brainard said interest rates still need to be raised. The aim is to cope with rising inflation. However, there is a potential for a slowdown in the rate of increase in light of the latest US inflation data.

Inflation is Still at 7.7%

Earlier, Federal Reserve Board Governor Christopher Waller reiterated that the United States central bank remains committed to battling high inflation despite a slowdown in the rate hike rate.

According to him, inflation of 7.7 percent is still very high. That is, the endpoint of the rate hike is likely to be a long way off. Market participants will still face this problem.

Regardless of how the market reacts to the comments of United States interest rate policymakers, technically gold still has a gap to rise. FXTM's Lukman Otunuga predicts something.

He said that a solid rally above $1,770 could push up the psychological level of gold prices towards the resistance level of $1,800. Elsewhere, World oil prices fell sharply to more than 3 percent at the start of the week.

Raising COVID-19 Cases in China Pushes the Oils Price

The slump of Oils Price was triggered by market panic over a surge in COVID cases in several regions of China. Yesterday morning, Brent oil moved in the range of $93.57 per barrel.

Meanwhile ,the US crude oil it is also known as WTI was trading at $85.53 per barrel. According to reports from official Chinese authorities, there were about 14,288 new COVID cases at the end of last week.

This marks a spike in daily cases above 10,000 for the first time since April 2022. The epicenter of the spread of COVID is dominated by the Chongqing, Henan, Guangdong. It was inner the Mongolia regions, as well as the capital Beijing. Alarming conditions related to the increase in COVID cases in China were confirmed by Matthew Bossons.

Several Activities are Stopped

According to an editor Bossons, a Shanghai-based journalist and editor since 2014 Said that many people have had to quarantine either in hotels or homes. It was due to strict restrictions imposed by the authorities

Both School activities and entertainment venues have reportedly been affected by the surge in COVID cases. Leon Li, an analyst at CMC Markets, said his view about this situation.

He stated that market participants before this were too optimistic about speculation of China's Zero COVID lifting some time ago. In fact, early winter does often see a surge in COVID cases. The virus spreads more aggressively over the winter and the surge in cases makes the Zero COVID policy (goal) unlikely to be achieved anytime soon. It may not happen until the first quarter of next year.