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On Wednesday, gold's price surged to nearly a month high as the US currency and US bond yields declined after the inflation report for September.
After rising by 0.2% on Tuesday, gold showed even more significant positive dynamics yesterday. During the trades, the asset rose by 2%, or $ 35.40. The final price was $1,794.70, which is the maximum value since September 15.
Meanwhile, silver also reached a monthly high on Wednesday. The metal finished the session on the New York COMEX Exchange at $23.17. Thus, the quotes rose by 66 cents, or 2.9%.
Analysts note that the rapid rise in precious metals was triggered by the decline of the US dollar and the yield on 10-year US bonds. Yesterday, the dollar index, which reflects the position of the US dollar relative to its main competitors, plummeted by 0.5% to 94.068.
The yield on US government bonds also declined. The indicator dropped to 1.548%, while it was at the level of 1.579% the day before, which is a 4-month high.
The main downward factor for the dollar and profitability was the report on consumer prices in the United States for September. Investors continue to digest the data that indicated an increase in inflationary pressure. Last month, the indicator rose by 0.4%, while economists had forecast an increase of 0.3%.
In annual terms, the consumer price index also increased in September. Its dynamics amounted to 5.4%, whereas it grew by 5.3% a month earlier.
The latest statistics on US inflation weakened the position of the dollar and returned investment attractiveness to gold as a protective instrument.
Analyst Chintan Karnani believes that the asset's price surged mainly on expectations that consumer prices will continue to move higher in the fourth quarter.
But amid the rising inflation, fears have intensified about an imminent tightening of the Fed's policy, which is a constraining factor for gold quotes.
Yesterday's publication of the minutes of the September meeting of the Federal Reserve indicated that the Central Bank may begin to reduce stimulus measures as early as mid-November.
Against this background, the dollar index and the yield of 10-year US bonds stabilized on Thursday morning after falling the day before, and the prices of precious metals went down and slipped from monthly peaks.
In this case, the price of gold declined by 0.3% or to $ 1,789.40.
Silver's price also declined. The asset fell by 0.5% and traded at $ 22.95.
Commodity experts emphasize that as the "hawkish" sentiment of the Fed increases, there will be a downward trend in metal prices.
"I expect that the dollar and yields will resume their growth soon, and the gold rally will evaporate as quickly as it began" - analyst Jeffrey Halley commented on the situation.
Now, the moving averages for 100 and 200 days lie between $1,795 and $1,800. This zone can become a serious obstacle to further growth of the asset.
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