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GOLD PRICE HOLDS 2-MONTH HIGH

By BUUMBA CHIMBULU

GOLD price this week held a two-month high ahead of Federal announcement risen more than four percent since the end of November amid headwinds in equity markets.

The prices retreated but still held near a two-month high, as investors awaited the outcome of a United States Federal Reserve meeting that may offer more clues on the outlook for monetary policy tightening.

This is according to the Mining.Com which stated that spot gold declined 0.8 percent to US$1, 833.15/oz, its highest since mid-November. 

United States gold futures fell 1.0 percent, trading at US$1, 832.70/oz in New York.

“Bullion has risen more than four percent since the end of November amid headwinds in equity markets as investors hone in on the possibility of an error by the Fed. 

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“The risk of a Russian invasion of Ukraine and a cut in the International Monetary Fund’s world economic growth forecast for this year are also aiding the safe haven asset,” stated Mining.Com.

Commenting on this development, Nicky Shiels, head of metals strategy at MKS PAMP South Africa said an accelerated Fed tapering would cause financial conditions to tighten further and gold to outperform equities, to a point.

“Gold is simply becoming a Fed policy mistake hedge,” Mr Shiels wrote in a Bloomberg note. 

In the same note, UBS analyst, Giovanni Staunovo, said unless the Fed surprised with an even more hawkish statement, gold could stay supported.

“Despite the Fed likely set to announce the start of a US rate hike cycle this week, gold keeps holding up well. Support for the yellow metal comes from high inflation and elevated market volatility,” Mr Staunovo said.

Recently, there has been an increase in gold demand from investors. 

Exchange-traded funds have added more than five tonnes of bullion so far this week, building on the 33 tonnes taken in the week before, Bloomberg data suggests.

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