Gold headed for the biggest monthly advance since July, with inflation risks focused ahead of key job data in the U.S. later this week that will provide clues about the recovery economic.
Some Federal Reserve officials have said recent price pressures are to be expected as the economy reopens amid accumulated demand and should turn out to be temporary as supply declines. The PCE price index, which the Fed uses for its inflation target, rose 3.6% year-over-year, the biggest jump since 2008.
Bullion has wiped out its losses in 2021 and is one of the best-performing metals in May, amid signs of rising inflation and a potentially uneven economic recovery due to the resurgence of coronavirus cases in some countries. Investor interest has also returned, as hedge funds and other large speculators have increased their net position in gold to the highest since early January, while holdings in traded funds in bullion-denominated securities they have risen in May after three consecutive months of falls.
“It has been a great month for gold price performance for several reasons: a weaker US dollar, slightly lower bond yields and a surprise impression of the CPI in the US began to provoke fears of inflation, ”said John Feeney, Sydney’s business development manager- ingot distributor Guardian Gold Australia. “There is also growing concern about a new wave of Covid in Southeast Asia, which adds to investors’ fears about a slower global recovery.”
The gold spot last traded around $ 1,905 Monday morning and rose 7.8% this month. Prices rose to $ 1,912.76 last week, the highest since Jan. 8. Silver, palladium, and platinum advanced. The Spot Bloomberg Dollar index headed for a second consecutive monthly drop.
The U.S. non-farm payroll report scheduled for release on Friday augurs a crucial moment for investors to assess whether the surprisingly warm employment gains seen last month were a momentary mistake or the start of ‘something more persistent.
“With gold rising above the $ 1,900 level, there is a clear upward momentum with demand for precious metals right now,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. $ 1,975 level. “