Gold Sinks 2%, Finally Breaking Back of $1,800 Support By Investing.com



© Reuters.

By Barani Krishnan

Investing.com – It looked invincible for a while against the twin evils of soaring inflation and the dollar. But gold finally succumbed to the rate hike chants around it, sinking 2% on Thursday to break the back of its erstwhile $1,800 support.

Gold futures’ most active contract on New York’s Comex, , slumped $35.90 to settle at $1,789.20 — settling below the $1,800 level the first time since Dec. 22.

The achilles heel for the yellow metal has been the $1,830 resistance, which it has tried in vain to crack numerous times since November.

It made another attempt at this on Wednesday, just before the release of the Federal Reserve meeting minutes for December that indicated the first pandemic-era U.S. rate hike might come as early as March — spelling a boon for the Treasury yields and the dollar and gloom for safe-havens such as gold.

“Gold’s recovery in late December appeared to be built on rocky foundations and the Fed minutes delivered a hammer blow to hopes of sustaining a move above $1,800 in the near term,” noted Craig Erlam, analyst at online trading platform OANDA.

The Fed is expediting its rate tightening to rein in inflation, growing at its fastest pace in 40 years in the United States.

News of rate hikes are almost always bad for gold, which somewhat reflected this last year as it closed 2021 down 3.6% for its first annual dip in three years and the sharpest slump since 2015.

But some analysts think that if the U.S. inflation theme remains strong through 2022, then gold could rebound, and even retrace 2020’s record highs above $2,100 — which, incidentally, came on the back of concerns about soaring price pressures.

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