Logo of Phnom Penh Post newspaper Phnom Penh Post - Inflationary pressure drives gold on upward trend

Inflationary pressure drives gold on upward trend

Content image - Phnom Penh Post
Analysis by Golden FX Link Capital business manager Nhim Kosol

Inflationary pressure drives gold on upward trend

Gold investors appear to be calling the Federal Reserve’s bluff that it will be able to get inflation under control as prices continue to hold around the $1,840+ per ounce since last week’s breakout move, Kitco said.

The base metals website reported that gold prices traded near a two-month high, but Wednesday’s breakout came as US bond yields pushed to their highest level in more than two years.

The 10-year yield is currently trading at 1.83 per cent, down slightly from Wednesday’s rise to 1.87 per cent. Treasury yields jumped more than 50 basis points since late last month and are hovering around -0.60 per cent, it said.

The Wall Street Journal quoted Federal Reserve chair Jerome Powell saying “inflation is high because supply and demand are out of whack”.

“The Fed can’t solve shipping or supply-chain bottlenecks, but higher interest rates can eventually cool demand by slowing hiring and income growth. Officials are hoping that inflation declines as the supply problems ease and demand shifts from goods, where prices rose sharply last year, toward services, where inflation has been less extreme,” said the business newspaper.

Interest rates are expected to increase by three quarter per cent points this year, according to central bank officials last month.

As a result, their benchmark short-term rate would rise to a range between 0.75 per cent and one per cent by the end of the year, up from its current level near zero.

Although rising consumer price pressures are leading to expectations for more aggressive monetary policy action from the Fed, when policy makers are trying to fight inflation into a slowing economy, it could lead to a growing risk of a policy error.

Golden FX Link Capital business manager Nhim Kosol said: “I believe rate hikes will have little impact on inflation, which continues to be driven in part by global supply chain constraints.”

Technically, he added that gold prices could be traded in a range of $1,830 to $1,847 per ounce as markets are looking for a break-out move to buy gold if it reaches a new higher high above the prior high of $1,847. For this week’s trading recommendation, investors should buy gold at $1,830, setting a stop-loss at $1,815; and a take-profit $1,865.

Content image - Phnom Penh Post


  • Research key to Kanitha’s rep for expertise

    Sok Kanitha is used to weighing in on controversial issues using a confident approach that signals expertise and authority, and a recent video she made was no exception. Her “Episode 342: The History of NATO” video went live on January 16, 2023 and immediately shot to 30,000 likes and 3,500

  • Cambodia maintains 'Kun Khmer' stance despite Thailand’s boycott threat

    Cambodia has taken the position that it will use the term "Kun Khmer" to refer to the sport of kickboxing at the upcoming Southeast Asian (SEA) Games, and has removed the term Muay from all references to the sport. Despite strong reactions from the Thai

  • Artificial insemination takes herd from 7 to 700

    Some farms breed local cows or even import bulls from a broad for the purpose of breeding heavier livestock for meat production. One Tbong Khnum farmer has found a more efficient way. Hout Leang employs artificial insemination to fertilise local cows. Thanks to imported “straws”

  • Chinese group tours return to Cambodia starting Feb 6

    Cambodia is among 20 countries selected by Beijing for a pilot programme allowing travel agencies to provide international group tours as well as flight and hotel packages to Chinese citizens, following a three-year ban. As the days tick down until the programme kicks off on February 6,

  • Capital-Poipet express rail project making headway

    The preliminary results of a feasibility study to upgrade the Phnom Penh-Poipet railway into Cambodia’s first express railway indicate that the project would cost more than $4 billion and would take around four years to complete. The study was carried out by China Road and

  • Thai boxers to join SEA Games’ Kun Khmer event

    The Cambodian SEA Games Organising Committee (CAMSOC) – together with the Kun Khmer International Federation (KKIF) and Khmer Boxing Federation – have achieved a “great success” by including Kun Khmer in the upcoming biennial multi-sports event on its home soil for the first time, said a senior