By Swann Collins, investor, writer and consultant in international affairs. Eurasia Business News, September 12, 2022

Gold prices hit $ 1,725 per troy ounce today, highest level since August 29, as dollar weakens on the foreign exchange market. The U.S. dollar index is sharply lower today and hit a two-week low after last week posting a 20-year high. The yield of US government bonds also fell, driving the rise of gold prices.

Quotations of December contracts on the New York Mercantile Exchange (NYMEX) during trading rise by 0.8% to $1,743.10 per ounce.

Silver for delivery in December jumped nearly 6%, rising for the sixth session in a row, and costs $18.75 an ounce.

Gold prices have updated the maximum since August 29, while silver prices hit record since August 17.

“Gold and silver are actively growing thanks to another sharp decline in the dollar index, which reached a two-week low,” wrote Jim Wyckoff, senior analyst at Kitco.com.

The ICE U.S. dollar index, which shows the dynamics of the US dollar against a basket of six major currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona), loses 0.78% by 18:50 on Monday,

“Gold in recent days has repeatedly successfully defended the support level of $ 1700 per ounce, which suggests that investors buying gold on a drawdown are trying to benefit from lower quotations,” said Fawad Razakzada, a market analyst at City Index.

High inflation in the U.S., with 8.5 percent in July, after 9.1% in June in annual terms, fuel the growth of gold prices. This rise benefits from comments by US Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium held on August 25-26. Jerome Powell said that the Fed’s main objective remained to reduce inflation by up to 2%, and that for this the central bank must maintain a strict monetary policy, continuing to raise interest rates, “even if it is painful”. In addition, the central banker noted that at the Fed’s next meeting in September, another significant rate hike is possible. Markets expect a rise of 75 basis points (0.75%) on September 20 and 21.

Investors fear that the Fed’s strict rate policy will break economic growth and generate lasting recession. In time of recession and inflation, gold is the safe haven of wealth.

Stocks gained to start the week with Tuesday’s consumer-price data in focus. All three major U.S. stock indexes and all 11 of the S&P 500’s sectors finished Monday in the green. Traders and investors are awaiting the latest U.S. inflation report. 

Read also : How to invest in gold

The benchmark S&P 500 rose 1.1%. The blue-chip Dow industrials added 0.7%, and the tech-heavy Nasdaq Composite led the charge with a 1.3% advance, reported the Wall Street Journal.

The yellow metal has always been a great hedge against inflation because it rises in price when the cost of living standards rises. Gold can store value efficiently, when paper currency loses purchasing power because of inflation.

Thank you for being among our readers.

Our community already has nearly 75,000 members.

Sign up to get our exclusive articles.

To receive premium content, subscribe, it’s only €9.99/month. You will see the subscription form on posts with restricted access.

Support us by sharing our publications!

© Copyright 2022 – Swann Collins, investor, writer and consultant in international affairs.