The gold price crossed the $1830 level today, reaching its highest level in 6 weeks. It then fell back to just above $1820 per ounce.
Gold seems to have been rising steadily since mid-December from levels around $1750-1760. It seems that inflation and the impact of the pandemic on the economy may be the main reasons for the rise. Geopolitical uncertainty on Russia's border with Ukraine may have also supported gold prices. The United States, according to media reports, has pledged a strong response in the event of a Russian invasion of Ukraine.
The potential for recent price increases may in turn have been partially offset by jumps in the value of the U.S. dollar and U.S. Treasury bond yields. The dollar index appears to have risen 0.2 percent on Monday, making up some of last week's losses, while the 10-year bond ended 2021 with its biggest yield increase since 2012 at 1.51 percent.
Higher bond yields appear to raise the opportunity cost of holding interest-free gold, making it less attractive. A more expensive dollar may in turn make gold more expensive for buyers holding currencies other than the USD.
Key OPEC+ meeting tomorrow
WTI crude oil futures appear to have risen towards $76 per barrel on Monday, with markets looking ahead to Tuesday's OPEC+ meeting, where a planned 400,000 barrels per day production increase planned for February is expected to be upheld, according to market consensus.
News that production in Libya will fall by 200,000 barrels a day over the next week as workers try to repair a damaged pipeline, less than two weeks after militias shut down the country's largest oil field, may have also contributed to the rise in oil prices. With the loss of supplies due to the closure of the Shahara field, total production in Libya is estimated to fall by about 700,000 barrels per day.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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