Last week, the price of gold rose above the $1,800 level as rising inflation drove investors to safe-haven assets and worries over the new coronavirus variant increased. U.S. gold futures rose by .4% to reach $1,804 while spot gold rose by .2% to sell at about $1,802 per ounce.
Equities also dropped, recoiling from a hawkish turn by international central banks focused on the economic risk that may be brought on by the increasing number of coronavirus cases and taming increasing price pressures. The omicron variant was identified in November and has added a new level of uncertainty for central bank officials in the United States, who must now evaluate how the new strain’s spread may impact the paths of growth and inflation as well as businesses and consumers. The pace of price increases has remained near the levels observed in the late ‘70s and early ‘80s inflation scares, and gone for long enough to begin undermining wage increases and depressing consumer sentiment.
Blue Line Futures chief market strategist Phillip Streible stated that with U.S. equities righting off their highs, growth would slow into the next quarter given the panic into safe-haven assets such as silver and gold. Streible added that the focus would be placed on labor data now that the meeting outcome of the Federal Reserve had brought uncertainty for precious metals.
On Wednesday, the U.S. Federal Reserve signaled three interest rate hikes by the end of next year, a move that would usually affect gold. This is because higher rates of interest increase the opportunity cost of holding nonyielding bullion. In a note, Michael Feroli, a JP Morgan economist, stated that new predictions by Federal Reserve policymakers will show higher projections for inflation and lower ones for the rate of unemployment.
Analysts believe that gold rose higher because rate hike prospects had been priced before the Fed made its announcement. Gains for gold came despite inflows into the U.S. dollar, which is also deemed to be a safe store of value during times of uncertainty. In a note, Ole Hansen, an analyst at Saxo Bank, stated that the bank’s outlook for next year was clouded with bearish gold predictions being driven by expectations for higher real yields.
Palladium, an auto-catalyst metal, also increased by more than 3% to reach $1,782, extending its sharp gains from the previous day. Streible notes that a rebound in the auto sector is driving the demand for the metal. On the other hand, platinum rose .5%, hitting $940.70 while silver hit $22.46.
This surge in the price of precious metals is set to give sector players such as StraightUp Resources Inc. (CSE: ST) (OTCQB: STUPF) added impetus to carry on with their exploration and development activities aimed at finding exploitable reserves that can meet the growing demand for these metals.
NOTE TO INVESTORS: The latest news and updates relating to StraightUp Resources Inc. (CSE: ST) (OTCQB: STUPF) are available in the company’s newsroom at https://ibn.fm/STUPF
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