Price of Gold Hits Two-Month High

Despite mounting pressure from increasing U.S. treasury yields, gold continued its rally this week. This comes as investors try to work with the expectation that major central banks around the globe will keep low interest rates in the short term.

Gold futures in the United States rose by 0.5%, hitting $1825. 80/ounce in New York, while spot gold also carried on with its momentum from last week, rising by 0.4% to reach $1824.28/ounce. This is the highest price spot gold has occupied in two months.

Before this, the price of gold futures in the U.S. was $1,810.10 per ounce while that of physical gold was at $1,810.28 per ounce.

In a report by Reuters, Ole Hansen from Saxo Bank stated that the precious metal was drifting after its strong finish last week, highlighting that traders were probably not convinced that there was enough in the gold market to challenge the main areas of resistance. Gold finished last week at roughly 2% higher, after the Bank of England held its rates and the United States Federal Reserve held its view that inflation was transitory.

Hansen added that yield increases, even by a few basis points, were enough to prompt some profit taking in the precious metal.

Meanwhile, benchmark 10-year yields rose after their almost two-month low in the prior session. This, in turn, increases the opportunity cost of holding gold bullion. Since the onset of the pandemic, the precious metal has been benefitting from the low interest-rate environment that spurs growth. This environment has pushed the price of gold to its highest in more than two years.

Despite this positive environment, investors have kept a sharp lookout for economic data as there exists a possibility that central banks will begin to tighten policy in order to combat rising inflation in the near term. The disruption in global supply chains coupled with the tightness in the labor market may cause another high reading for consumer prices in the United States, which is expected later this week.

However, OANDA senior market analyst Edward Moya,stated in a report by Reuters that nothing would change what the Chair of the Federal Reserve highlighted last week. Reuters noted that any advantageous surprise may likely renew talks of a Fed hike.

Kyle Rodda, an IG Markets analyst, forecasts that data on inflation will have to be remarkably above expectation for any jolt back into the chance of higher interest rates.

This ongoing bull run in the gold market has given companies such as Asia Broadband Inc. (OTC: AABB) a lot to smile about as they are delivering greater value to their investors and other stakeholders.

NOTE TO INVESTORS: The latest news and updates relating to Asia Broadband Inc. (OTC: AABB) are available in the company’s newsroom at https://ibn.fm/AABB

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