The price of gold has risen in the last few days following the rise in U.S. inflation. The SPDR gold trust (GLD: NYSE) gapped up and the volume reached a level not seen since September. There could be a turning point here and ETF volumes should be watched closely.
Open interest in gold futures markets rose by nearly 24.5K contracts on Wednesday and clinched the fifth consecutive daily build considering flash data from CME Group. In the same line, the volume went up by around 150.3K contracts to 443464 contracts, the largest level since May 25.
Gold now looks to 2021 highs past $1,900 –
Prices of the ounce troy of gold rose to levels last seen in June near $1,870 on Wednesday. The sharp move was on the back of rising open interest and volume, opening the door to continuing the uptrend in the near term. That said, the next level of note now emerges at the YTD high around $1,913 recorded on June 1.
The red hot CPI report on Wednesday pushed investors into inflation hedges old and new, as stocks and bonds came under pressure; with hot US inflation bringing back rate hike expectations on the table from the Fed and the ECB, gold price continues to benefit from its increased demand as an inflation hedge. Holiday-thinned market conditions are also boding well for the bright metal, as attention shifts towards Friday’s US Michigan Consumer Sentiment data. In the meantime, expectations of global tightening will continue to influence gold prices.
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