CIBC analysts said that as inflationary pressure continues to increase, this fact will work in favor of gold.

Analysts also noted that the precious metal is moving into a seasonally strong period that lasts from November to February and the new momentum points to an improvement in sentiment in mining stocks. However, they warned that gold prices and the mining sector have moved into an overbought zone, but this should not be a serious obstacle to higher prices.

Commodity analysts noted that the growing inflationary pressure helped gold prices to resist the renewed strength of the US dollar, which reached a new 16-month growth at the beginning of the week.

Last week, the US consumer price index showed an annual increase of 6.2%, which is the most significant increase in 31 years. On Wednesday, the inflation rate in Canada rose by 4.7% per year, which was the biggest surge in 18 years. In parallel with these indicators, inflationary pressure in the UK increased to 4.2% per year, which was the highest in a decade.

According to CIBC, given the potential for gold prices to rise until the beginning of 2022, the mining sector is beginning to attract new attention as investors look for opportunities to use borrowed funds.

The Canadian bank noted that gold reserves are as cheap as the previous jumps in 2018, 2015, and 2000.