21.10.202111:45 Forex Analysis & Reviews: Gold recovered bullish momentum as the US dollar collapsed and inflationary pressures strengthened

Exchange Rates 21.10.2021 analysis

Gold closed in the positive zone for the second session in a row. On Wednesday, its value was dispersed by the falling US dollar, which was under pressure from increased concerns about rising inflation.

Yesterday, its price grew compared to 0.8%, or $ 14.40 during the other day. The asset closed the session on the New York Stock Exchange COMEX at $1,784.90. At the same time, the value of the most actively traded contracts reached its maximum value since mid-October.

Meanwhile, silver also showed strong growth. Its quotes surged by 2.9% and reached a monthly high of $24.34.

Analysts attribute the recovery of bullish momentum in the precious metals market to increased concerns about rising prices.

On October 20, Deputy Fed Chairman Randal Quarles said at the International Conference of the Milken Institute that most of his colleagues on the interest rate committee expect that US inflation will begin to decline to 2% only over the next year.

On this wave, investors' interest in gold, which is considered one of the best instruments of protection against inflation, has increased, and the appetite for US Treasury bonds has decreased.

The rally of 10-year US bonds, which was strengthened by expectations of an imminent tightening of the Fed's monetary policy, seems to have stopped this week. The sideways movement of yields, which was observed on Wednesday, caused damage to the US dollar.

The US currency began to decline after the opening of the stock exchange, where euphoria optimism dominated yesterday. Wall Street traded at record highs after solid earnings reports from large companies. Against the background of increasing demand for risky assets, the US dollar lost its position.

Since this week began, the dollar index has already fallen by 0.4% and retreated by almost 1% from the annual high of 94.50 points reached last week, while on the contrary, the price of gold has increased. During this period, the precious metal rose by more than 1%.

As for Thursday morning, the greenback is stable against its main competitors, which determines the current dynamics of the yellow asset. Compared to yesterday's steady growth, the quotes are moving weakly in the upward direction today.

So, earlier, the cost of the precious metal symbolically rose by only 0.01%, or $ 0.25, reaching the level of $1,785.15.

Exchange Rates 21.10.2021 analysis

Silver also looks weak. The asset also rose (by 0.01%) in the morning and was trading at $24,448 per ounce.

Exchange Rates 21.10.2021 analysis

Analysts believe that the current key deterrent for precious metals is Bitcoin. Yesterday, the digital coin reached a significant level of $ 67 thousand, thereby updating its historical high.

In addition, a number of speeches by Fed officials may affect the price of gold on Thursday and Friday, but the most important price-forming factor will be tomorrow's publication of data on the index of business activity in the manufacturing industry in the United States.

Аlena Ivannitskaya,
Esperto analitico di InstaForex
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