Gold Goes For Biggest Monthly Gain in 10 Months on Inflation Risks

Gold is headed for the biggest monthly advance since July, due to inflation risks ahead of key US jobs data due later this week.

The US NFP report to be released Friday marks a pivotal moment for investors to assess whether surprisingly tepid job gains seen last month were a momentary blip or the start of persistent economic recovery.

Some Federal Reserve officials have said that recent price pressures are to be expected as the economy reopens. These should, however, be temporary. The PCE price index that the Fed uses for its inflation target rose 3.6% from a year earlier - its biggest jump since 2008.

Gold has erased its 2021 losses, and is one of the best-performing metals in May, amid signs of rising inflation and a potentially uneven economic recovery due to the resurgence in COVID-19 cases in some countries. 

“It’s been a great month for gold price performance for a number of reasons - a weaker U.S. dollar, slightly lower bond yields and a surprise CPI print in the U.S. started to spark inflation fears. There is also growing concern over a new wave of Covid in Southeast Asia, which is adding to investors fears around a slower global recovery”, John Feeney - business development manager at Sydney-based bullion dealer Guardian Gold Australia commented.

Gold advanced 0.2% to $1,907 an ounce by 9:49 a.m. in Singapore, and is up 7.8% this month. Prices climbed to $1,912.76 last week, the highest since January 8th. The Bloomberg Dollar Spot Index headed for a second straight monthly drop.

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