By Barani Krishnan
Investing.com - It has exceeded most gold bears’ expectations, but bullion’s true test still lies in its ability to recapture $1,900 pricing and beyond.
The yellow metal sparkled for a second week in a row, notching a win of 2.8% this week after last week’s 1.8%. It also rose for a seventh straight day, its longest stretch in the green from the end of June to the first week of July.
U.S. gold futures’ most active contract, December, settled Friday’s trade up $4.60, or 0.3%, at $1,868.50 an ounce. It earlier peaked at $1,871.35 — its highest since June 15.
“What’s happening to gold is certainly great, but to me, the price still needs to get beyond $1,900 in order to establish its true cred as an inflation hedge,” said Phillip Streible, precious metals strategist at Blue Line Futures in Chicago.
Gold last traded at $1,900 levels in June.
Bullion has always been touted as an inflation hedge. But it hasn’t been able to live up to that billing over the past year as incessant speculation that the Federal Reserve will be forced in a faster-than-expected rate hike had sent Treasury yields and the dollar rallying instead at bullion’s expense.
That trend abated after Fed Chair Jay Powell assured earlier this month that the central bank will be patient with any rate hike that will only come after the middle of 2022 and most likely toward the end of the year.
This week’s rally in gold came as the Labor Department reported that the U.S. Consumer Price Index, which represents a basket of products ranging from gasoline and health care to groceries and rents, rose 6.2% during the year to October. It was the fastest growth of the so-called CPI since November 1990, an acceleration driven mostly by pump prices of fuel running at seven-year highs.