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Gold Price Rises Due to Confident Tone of Central Banks

Ukraine / Business and Finance

The actions of the world's central banks contributed to the growth of gold

Gold Price Rises Due to Confident Tone of Central Banks

Gold prices rose more than 1% on Friday, bumping off stronger-than-expected October US employment data as major central banks continue to maintain a dovish tone on interest rates.

Spot gold was up 1.1% to $ 1,810.28 an ounce by noon ET, the highest in a week. US December gold futures rose 0.9% to $ 1,810.10 an ounce.

The limited reaction to the latest employment data shows that "despite the strong labor market report, it will not change what Federal Reserve Chairman Jerome Powell said this week," Edward Moya, senior analyst wrote in the report. OANDA brokerage market.

The low interest rates that boosted economic growth during the coronavirus pandemic have pushed gold prices to new highs in the past two years. Simple monetary policy lowers the opportunity cost of owning non-profitable assets such as bullion.

On Wednesday, the Fed was of its opinion that inflation would be "transient" and, most likely, will not require a rapid increase in interest rates. After that, the Bank of England surprised the markets by keeping interest rates unchanged.

The actions of these central banks helped gold ward off early losses in the week, allowing it to end the week with 1.0% gains.

“Gold bulls seem to be drawing strength from the Fed's leisurely stance on raising interest rates,” FXTM analyst Lukman Otunuga said, adding that low Treasury yields are complementary to earnings.

The yield on 10-year US Treasuries on Friday fell to its lowest level in about a month.

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