Investing.com -- Gold bulls were jolted from their reverie Tuesday, sending the yellow metal into an upswing mode for the first time in nearly a week and to 7-week highs after the European and Canadian central banks signaled hard-fought wins against inflation.
The front-month August gold contract on New York’s Comex settled at $1980.80 an ounce, up $24.80, or 1.2%. The session high was $1,988.25, a peak Comex gold had not gotten to since cresting at the $2,000 in late May.
The spot price of gold, which reflects physical trades in bullion and is more closely followed than futures by some traders, was at $1,977.62 by 16:00 ET (20:00 GMT), up $22.68, or 1.2%.
Gold traders put their rally caps on after the European Central Bank signaled that it could be ready to pause on rate hikes from September onward while Canada’s inflation dropped to within the control range of the Bank of Canada for the first time since March 2021.
Falling global bond yields were also prodding investors to move out of Treasuries and into better potential havens like gold as well as true risk assets such as oil and equities, said analysts.
“Gold might struggle to make a run at the $2,000 level, but that could change if bond yields continue to come down and the Fed signals they are likely done hiking next week after delivering one last quarter-point rate rise,” said Ed Moya, analyst at online trading platform OANDA.
All eyes are now on the Fed and what it will do to rates when its policy-makers sit again on July 26 to decide on rates. While that so-called Federal Open Market Committee of the Fed decided to pass on a hike last month, economists think in all likelihood it will vote for a 25-basis point increase this time, in keeping with its recent pace of hikes.