Disappointing consumer sentiment data suggests that the Fed may stay put about asset purchase
Gold prices held near a one-week high on Monday, as a plunge in US consumer sentiment allayed some concerns of an early tapering by the Federal Reserve.
“The disappointing consumer sentiment data suggests that the Fed may have more reasons to stay put about tapering asset purchase, and this is definitely good news for gold,” said Margaret Yang, a strategist at DailyFX. US consumer sentiment dropped sharply in early-August to its lowest level in a decade, as rising cases of Delta variant of the coronavirus threaten to dent the pace of economic recovery.
Gold is considered a hedge against inflation, but it is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar.
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