Gold futures rose on weak dollar and inflation fears

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Gold futures rose on weak dollar and inflation fears


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The base for gold futures, the most active June 2021 Comex contract, is currently set at $ 1,756.50 after taking into account current gains of $ 14.90 (+ 0.86%). The weak dollar was partly responsible for today’s gains, but the majority of the gains were due to market participants bidding the precious metal higher as active buyers. On a silver basis, the most active Comex contract in May 2021 gained $ 0.28 and is currently pegged at $ 25.525.

In gold futures and spot prices, it was the weakness of the dollar that partially supported the rise in gold and silver prices. The dollar index has lost 40 points, or -0.40%, and is currently pegged at 92.10. According to the KGX (Kitco Gold Index), spot gold is currently pegged at $ 1,755.80, which represents a net gain of $ 18.20 on the day. On closer inspection, market participants offered the precious metal up to $ 11.10. At the same time, the weak dollar contributed an additional $ 7.10 of value to one troy ounce of gold.

Bitcoin futures that trade on the Chicago Mercantile gained $ 1,735 today, remaining extremely strong with a single coin valued at $ 58,045.

Much of today’s gains in precious metals and US stocks is directly linked to minutes from last month’s FOMC meeting, which were released yesterday. In addition, the Federal Reserve is not alone in its mandate to continue to offer extremely accommodating rates vis-à-vis the Fed funds rate, which is currently set between 0 and ¼%. In addition, they continue to add an additional $ 120 billion per month to their asset balance sheets by purchasing US bonds and mortgage-backed securities.

The Federal Reserve is not alone in its monetary policy mandate. On Tuesday, the IMF backed the Fed’s decision to be patient and not tip the boat by raising interest rates too quickly. The International Monetary Fund has made it clear that it also intends to maintain an extremely accommodative monetary policy. In their latest Global Financial Stability Report, they sent a strong message that the current conciliatory behavior of central banks around the world continues to be necessary. Both entities are keenly aware that we live in a global economic world in which a positive movement in any major country has a ripple effect on other countries, and that too rapid a rise in rates could easily suffocate. the economic rebound observed in the United States and to a lesser extent. extended in Europe.

Today, President Jerome Powell attended a virtual spring meeting sponsored by the International Monetary Fund and the World Bank. He acknowledged that a number of factors are working together to support a better economic outlook in the United States. Stating that these factors have helped put the nation “on track to allow a full reopening of the economy fairly quickly”. However, he also spoke about the warning that many Americans who were unemployed will struggle to find new jobs because some industries will likely be smaller than they were before the pandemic, as well as a statement saying, “It is important to remember that we are not going back to the same economy. It will be a different economy. ”

If the IMF and Federal Reserve continue to maintain their extremely accommodative policies as such, they could have a profound and negative impact on both the euro and the US dollar. This will most likely cause these two currencies to lose value over time, which in turn has created new concerns about rising inflation rates.

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Wishing you, as always, good trading,

Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.

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