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Gold continues to surge after inflation shock, but Citi says it may be a winter bull market at best

Gold costs continued to surge on Thursday, following hotter-than-expected U.S. inflation, however Citigroup strategists had been warning that contemporary momentum for the dear metallic might not final past winter.

“Ought to gold costs maintain close to $1,850/oz this week, new investor inflows are prone to materialize and $1,900/oz could possibly be the following upside goal,” mentioned a workforce of Citi strategist led by Aakash Doshi, in a be aware to shoppers late Wednesday.

“Nevertheless, a stronger US$ and extra aggressive Fed pricing in STIR [short-term interest rates] markets are headwinds for gold value cheer, even when the inflation impulse appears strong,” mentioned Doshi.

Learn: Why surging U.S. inflation has gold bulls looking for record highs

On Thursday, gold for December supply
GCZ21,
+0.87%

GC00,
+0.87%

rose $15, or 0.8%, to $1,863.50 an oz, headed for an additional shut not seen in months. On Wednesday, gold surged $17.50, or 1%, to settle at $1,848.30 an oz on Comex, for its highest settlement since mid-June, in line with FactSet knowledge.

The features got here on the heels of a 0.9% jump in consumer prices index, effectively above the 0.6% that economists anticipated. Yearly, inflation climbed to six.2%, the most important leap in over 31 years. There isn’t a knowledge scheduled for Thursday because of the Veterans Day vacation.

“Issues about extra persistent inflation and even the potential for stagflation is buttressing inflation hedge demand for TIPS, gold, and crypto, which might proceed thematically within the short-term as November CPI ought to maintain exhibiting underlying energy,” mentioned Doshi and the workforce.

Gold’s features coincided with a robust greenback, a transfer that continued on Thursday. The greenback, as gauged by the ICE U.S. Greenback Index 
DXY,
+0.20%
,
 rose 0.2% to 95.053. Greenback energy typically weighs on costs for dollar-denominated gold.

Citi lifted its 0 to three month gold point-price goal by 11% to $1,900 an oz and its fourth-quarter forecast to $1,800 an oz from $1,700. However whereas Doshi mentioned they’ve priced in a “fat-tail threat” for the commodity to submit contemporary nominal highs above $2,100 an oz subsequent yr, their base case is bearish for the second half of 2022 by way of 2023. They count on the Fed will sign a faster tempo of taper on the December FOMC.

December silver costs
SI00,
+1.24%

SIZ21,
+1.24%

climbed alongside gold, rising 26 cents, or 1%, to $25.03. Silver climbed 1.9% to $24.772 an oz on Wednesday, the best most-active contract end since early September.

Amongst different metals, December copper 
HGZ21,
+1.26%

rose 1.1% to $4.372 a pound. January platinum
PLF22,
+1.26%

 added 1.3% to $1,090 an oz and December palladium rose 0.5% to $2,048.50 an oz.

https://www.marketwatch.com/story/gold-continues-to-surge-after-inflation-shock-but-citi-says-it-may-be-a-winter-bull-market-at-best-11636622791?rss=1&siteid=rss | Gold continues to surge after inflation shock, however Citi says it could be a winter bull market at finest

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