Gold and Other Precious Metals May Finally Be Catching Upward Traction

The prices of precious metals finally leaped off and extended gains on Thursday as investors turned to safe-haven assets since the omicron coronavirus raised alarm by the risk of the deepening dilemma between the priority of curbing the current inflation and helping the world economy to get out of the woods. If gold catches the long-overdue traction, the trend may become very sustainable.

To fight the economic crisis and the surging inflation, central banks across the globe adjusted their monetary policies this week. The Federal Reserve doubled the pace of asset purchases to $30 billion from January in the recent FOMC decision while announcing rate hikes for 2022, and the Bank of England surprisingly increased its key interest rate from 0.10% to 0.25%.

Arguably, the dollar has already been pricing in at least two rate hikes next year, and while some emerging markets will benefit from commodity price improvements, that achievement might be solidified by a broad economic recovery, if central banks wouldn’t rush with further tightening steps. Bearing in mind the ubiquitous search for yield and diversification, coupled with the possibility of an improvement in the euro, and a case favoring gold and other precious metals could look really convincing.

In the meantime, spot gold rose 2.26% to go for $1,808.07 per ounce currently, while silver soared 3.05% to $22.62 a troy ounce. In their turns, platinum gained 0.64% to $940.36 an ounce, and palladium surged as much as 7.25% to $1,763.50. Gold rebounded from an intra-month low of US$1,763/oz on November 3 when the U.S. Fed announced its plan to taper its bond-buying program while not rushing rate rises. Gold’s move was accelerated when the BoE hinted at a possibility of increasing its key interest rate sooner rather than later.