By Barani Krishnan
Investing.com -- Gold extended highs above $2,000 an ounce for a second day in a row before settling above that key bullish level Tuesday for the first time in 19 months.
“In just a few months, the world went from hating gold as expectations for a robust global economic recovery dented demand for safe-havens, to now becoming worried about stagflation and recession risks,” said Ed Moya, analyst at online trading platform OANDA.
“Gold should continue to do well as intensifying sanctions from the West will continue to drive persistent volatility across commodities which will keep pushing inflation expectations to uncomfortable levels for central bankers,” Moya added.
Gold’s most-active contract on New York’s Comex, April, settled up $47.40, or 2.4%, at $2,043.30 an ounce. Earlier in the session, it got to $2,078.80 — some $43 short of rewriting Comex gold’s record high $2,121 attained in August 2020.
How gold performs rest of this week and next week could depend much on Thursday’s Consumer Price Index reading for February and the March 15-16 meeting of the Federal Reserve’s policy-making Federal Open Market Committee, which will decide the first pandemic-era rate hike.
The so-called CPI grew 7.5% year-on-year in January — already the highest in 40 years. The consensus for February is a 7.9% year-on-year growth — which some economists think is conservative.
Fed Chair Jerome Powell has so far indicated that he’s comfortable with a quarter percentage point rate hike next year though many others in the FOMC are clamoring for more. Anway, Powell’s comments came just before oil prices hit $130 a barrel this week, so he may reconsider his still-dovish views.
A bigger CPI print for February and a smaller inaugural rate hike may be the last push gold needs for a record high.