Gold prices are rising during early Wednesday
Gold prices are rising during early Wednesday trading, supported by the easing back of the US dollar and rises in the number of new COVID infections around the globe. The latest wave of the pandemic is generating some concern due to the unprecedented rate of infection, a scenario that normally would be highly supportive for the safe-haven gold. However, the precious metal’s scope for further gains is limited by the strength of the US dollar, due to the inverted correlation between the two assets. The publication later today of the minutes for last month’s FOMC meeting is likely to provide more clues over the timing of the American central bank rate hikes and influence the performance of the greenback, which to a large extent remains the main driver behind gold’s price action.
The US dollar is giving up some of its new year gains during early Wednesday trading. The pause in greenback gains follows a similar dynamic in US Treasury yields, which also eased back after reaching pre-pandemic levels on Tuesday. The big question now is the timing of the Federal Reserve’s rate hikes, with high inflation determining that the question no longer is if but rather when. Today’s publication of the last FOMC minutes will be scrutinized by investors keen to find clues for when the American central bank is planning to raise interest rates, with hints of hawkishness likely to reignite the dollar’s new year rally.
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