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A flash of precious metals in the chains of fear
Gold prices and silver seem to be headed for two-month highs. This may mean that investors are turning to the so-called safe havens as inflation and geopolitical tensions create increased nervousness and uncertainty ahead of next week's Federal Reserve meeting.
Gold Futures rose by more than 30 percent on Wednesday, reaching the price of $ 1 per ounce. At the same time silver futures grew by more than 3 percent to $ 24. As precious metal prices began to rise, markets learned of further signs of problematic inflation on a global scale.
Inflation records in Great Britain and Canada
In the UK, annual inflation rose more than expected, reaching 5,4% in December, the highest reading since March 1992. Canada's inflation index also rose to the highest level in 30 years, with the consumer price index hitting there in December 4,8. XNUMX percent on an annual basis.
Higher inflation may increase risk-off sentiment in the market, which is already pricing in further rate hikes and a greater likelihood of central banks making a mistake when tightening their policy. Geopolitical tensions may also favor precious metals as investors are becoming more cautious.
Metals attract capital from exchanges and bonds
The price increases of gold and silver coincided with the announcement by the president's administration Joe Biden additional military aid to Ukraine in the amount of $ 200 million, due to possible fears of a Russian invasion.
At the same time, there was a correction in the stock indices on Wall Street, and the US bond market seems to be selling off before the interest rate increase expected by the market. Perhaps this capital went in part to the precious metals market, which translated into possible price increases.
Was it in the case of a hawkish attitude Federal Reserve and possible increase in US bond yields, may gold and silver prices stay at higher levels, or is this just a one-off move? We can get some answers to these questions on January 26, when the Fed makes decisions on interest rates.
