On Friday, gold longs enjoyed a rollercoaster ride that took them as high as $1,800, then dropped and finally closed positively.
New York’s Comex settled December gold at $1,796.30, an increase of 0.8%. The metal shot up to $1,815.50 earlier in the session, only the second time in a week it has surpassed $1,800.
The benchmark gold futures contract gained 1.6% for the week, extending its 0.6% gain from the previous week.
Gold prices moved Friday after Federal Reserve Chairman, Jerome Powell announced that it will start tapering its monthly stimulus of $120 billion between November and December, but did not provide a timeline for rate hikes.
Timing of the taper had kept the markets on tenterhooks for months. Rates have now become the focus of speculation.
Powell revealed that the Fed will begin tapering in mid-2022, that transitory inflation will last longer than expected, and that rate hike expectations should be written with caution.
- Quick fact: Precious metals tend to move in the opposite direction of global stock markets, especially those in the United States and Europe. Gold is a physical and emotional attraction for humans. Humans store value in it. Investors usually purchase the precious metal mainly to hedge against fiat inflation.
Even though gold finished in the positive and up more than 1.5% in the week, its inherent strength was still apparent after weeks spent trading in the mid to lower $1,700 range.
Global investors are aware that negative real yields will persist well into next year and that gold will return to its role as a hedge against inflation, further suggesting a break below $1,600 an ounce this year might be a tall order.
