25.10.202110:05 Forex Analysis & Reviews: Gold aims to break the key $1,800 mark

The $1,800 level remains elusive for gold. Last Friday the asset was able to break it but ended the session below that level. Today, metal will once again try to reach new highs.

Towards the end of last week, gold rose sharply. Friday's high was $1,815.50. However, the metal was unable to gain a foothold at this peak. By the close of the trading session, the bullion had fallen below the key $1,800 level to $1,796.30.

Despite an unfortunate decline during the day, gold ended on the plus side. The asset sank 0.2% on Thursday and on Friday it gained 0.8%, or $14.40, contributing to a weekly gain of 1.6%. The metal has not shown such a significant trend since the end of August.

Silver also gained markedly by the end of the past seven days. It added 1.2% on Friday, with a weekly gain of 4.7%, its best performance since the beginning of May.

Analysts attributed Friday's substantial rise in the precious metals to a decline in the dollar and US Treasury bond yields. On October 22, the dollar index was down 0.1% against its main competitors, and bond yields plummeted to 1.659%. The previous day the index reached 1.674%.

"Inflation concerns are supporting gold prices," Chintan Karnani, director of research at Insignia Consultants, said. The problem of rising prices is a global one. The Russian central bank has already raised interest rates to control inflation. And the Bank of England, the European Central Bank (ECB), the Bank of Japan, and US Federal Reserve will hold meetings in the next two weeks.

As for the US regulator, the expert does not expect any actions from it, given the speech of the Fed governor on Friday. Jerome Powell clarified the central bank's stance on inflation, reducing bond purchases, and raising interest rates.

The Fed Chairman said that US inflation could fall next year as the pressure of the COVID-19 pandemic eases. He also made it clear that the central bank was ready to start tapering its asset purchases, but they would not raise interest rates yet.

The prospect that the US regulator will soon start reducing bond purchases negatively affected gold prices on Friday. Following the publication of J. Powell's statements, prices slipped from their intraday high to below $1,800.

Nevertheless, gold starts the new working week with an upward move. The asset is once again climbing towards the key mark, gaining strength against the backdrop of a weakening dollar.

Experts note that the greenback is now losing its edge as investors expect rates in other currencies to rise sooner. This week, traders' attention is focused on the Bank of Japan and ECB meetings on Thursday.

Gold prices are also supported on Monday by renewed concerns over the rising incidence of coronavirus in Europe and Asia. An increase of panic sentiment usually boosts traders' appetite for defensive assets such as gold.

The bullion price rose to $1,799.8 in the morning. Compared to Friday, the metal was up $3.5, or 0.19%. At the same time, silver also showed a positive trend. It rose 0.46% to $24,562.