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Gold Back at $1,800 Lows as Rising-With-Inflation Theme Busted -Breaking

By Barani Krishnan – It was good for as long as it lasted — which wasn’t too long, anyway — and gold’s rising-with-inflation seemed to have come to an abrupt end with no clear indications why.

Suggestions from the trade was that Jerome Powell’s nomination by President Joe Biden to hold the job of Federal Reserve Chair for four more years could be one reason, as it ushers in a higher degree of certainty over monetary policy — and a downgrade for safe-haven gold.

Gold was already below $1850, well before the White House confirmed that Powell would be given a new term. Instead, Lael brainard will serve as vice chair at the Fed.

That suggested that the more than two-week long rally in bullion had reached exhaustion despite gold bulls’ belief that it could run to as high as $1,900.

“The U.S. inflation story hasn’t gone away for sure, but gold’s running-with-inflation story seems busted for now and the Jay Powell story is being listed as the reason, though there’s probably more to do with it,” said Phillip Streible, precious metals strategist at Chicago’s Blueline Futures.

U.S. gold futures’ most active contract, , settled Friday’s trade down $45.30, or 2.4%, at $1,806.30 an ounce. The biggest loss of gold silence in mid-September was this one-day.

Even though swings were below $1,850 this week, December Gold had reached a five-week high of nearly $1,880 last week. This bolstered the belief of market bulls that yellow metal could still reach $1,900 due to the U.S. Inflation theme.

​​Bullion has always been touted as an inflation hedge. But it hasn’t been able to live up to that billing this year on market talk that the Fed will be forced in a faster-than-expected rate hike — speculation that sent Treasury yields and the dollar rallying instead, at bullion’s expense.

This trend has slowed down somewhat since Powell earlier in the month assured that Powell would be patient with any rate rise that comes after the second half next year.

Now, gold’s run on that could be over.

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