Recovery above $1,800 for gold

A weaker dollar and a drop in US bond yields revived investor interest in gold, which ended today’s trade regaining the psychological level of $1,800.

Specifically, the December gold contract closed at $1,805.2 an ounce, up 0.8% or about $14.

The intense uncertainties at the time have not highlighted the character of gold as a safe investment haven, as it has been famous for over time, as US government bonds and the rally of the dollar work competitively for the precious metal in the environment of the intensifying tightening of monetary policy by the Fed.

Notably, extremely strong US labor market data on Friday, which reignited fears of further aggressive Fed moves, sent gold down 0.9%.

As Edward Moya notes, “The market appears to have priced in the jobs shock…however, gold will have a hard time if the Fed appears to be going too far with tightening.”

For his part, Rupert Rowling of Kinesis Money estimates that “with gold’s gains limited by the possibility of more aggressive rate hikes, the strength of the support level around $1,700 will be tested when the next Fed decision is announced.”

Against this backdrop, investors are expected to focus on key inflation data on Wednesday, which will provide fresh clues as the market assesses the Fed’s next move.