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Gold targets $1,853

Gold prices are trending higher for the ninth session in a row following a short breather. By the time of writing, price action reached $1,828 and may continue to rise. The next target for gold is at $1,853, a high since January 25.

These gains show how far the US Federal Reserve lags behind the inflation curve and how the market factors in this risk. It may well be that the Fed will not be able to catch up with inflation as quickly as it plans, or will start raising rates when the economic momentum fades. These are the risks that the market is now hedging with gold. Against this backdrop, the precious metal will be able to shrug off both the strengthening of the dollar and the widening of UST yields.

CME Group data confirms the demand for gold: the number of futures contracts for precious metal increased (+3.7k), while trading volumes also expanded (+7.3k contacts).

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