Gold jumps to a one-week high on hopes of Fed stimulus

December 16, 2020 06:43 PM AEDT | By Kunal Sawhney

Gold jumps to a one-week high on hopes of Fed stimulus

Hedge against inflation

The Fed is likely to keep the interest rates near the zero level, opined market experts. Any asset purchases by the Fed are expected to reignite the gold price rise momentum, they added. Gold has traditionally been seen as a hedge against currency devaluation and inflationary pressures. Any large scale monetary and fiscal stimulus in America could push up the inflation rate.

At the same time, a news that kept the gold rise in check was that Moderna’s vaccine was all set for its regulatory approvals this week in the US.

It needs to be noted here that the speculative interest of the investors seems to have waned in gold as they shift towards the equities with an end of pandemic more or less in sight now. However, Koichiro Kamei, gold analyst said that even when the globe recovers from the pandemic to some extent, the structural factors supporting higher gold prices are likely to remain present.

Analysts expect the gold to keep rallying next year with the vaccine optimism settling in and investors focusing on rising inflation hopes.

(Image source: ©Kalkine Group 2020)

UK gold

The spot gold rate was hovering at £1380.18 per ounce, up 1.53 per cent at 7.10 AM today.

But UK gold prices had dropped steeply, down by almost 2.5 per cent to £1356.86 two days ago on Monday, which was a near two-week low value. This happened because the pound gained strength, reaping its sharpest jump in the past two months after Boris Johnson, the UK PM and Ursula von der Leyen, President, European Commission agreed to go an extra mile to keep working on a post-Brexit agreement.

The price of the yellow metal in the UK lost a bit of momentum last week as well with the Pfizer vaccine’s national rollout news.

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