Gold (XAU/USD) is rising due to the inflation risks that the federal Reserve have clearly highlighted in recent rhetoric, switching from being on the fence to possibly taking action as soon as December. In Asia, the price of XAU/USD has rallied from a low of $1,780.88 to a high of $1,786.65 so far.
The shift towards inflation at the Federal Reserve, despite the new coronavirus Omicron variant and less emphasis on the jobs market, is one that should be favourable to the gold bugs. Higher market volatility came as a consequence of recent Fed rhetoric and that is good for gold, bad for equities and riskier asset classes.
The higher risk of ‘persistent inflation’ is where gold should thrive. Meanwhile, the Nonfarm Payrolls, while missing the prior and expectations, the data, in general, remains strong. Prospects of a fast taper can be supportive of the greenback, especially following positive revisions and solid details such as a lower Unemployment Rate at 4.2% vs 4.5% expected and 4.6% prior. However, this does not remove the need for protection against inflation which gold is renowned for.
Gold (XAU/USD) retreats below $1,800, easing to $1,781 amid Monday’s initial Asian session, following the heaviest daily run-up in over two Weeks.