The decline in bond yields and the increase in SPDR gold positions supported the rise in gold prices. However, strong economic data on Wednesday and record U. S. stocks limited gold's room to rise, and there were persistent calls for the Fed to raise interest rates ahead of time. After hawkish comments, U.S. Treasury Secretary Janet Yellen clarified that she was not trying to predict interest rate hikes to control inflationary pressures. Markets may have overreacted to her earlier comments, highlighting the vulnerability of risky assets at a time when they are worried about the Fed's tapering of its stimulus programme.

Recent increases in metals, energy and agricultural prices have led to higher inflation expectations, which could increase gold's attractiveness as a hedge against inflation. Signs of faster price growth have pulled down real yields this week. The interest rate on 10-year inflation index securities fell 6 basis points to-0.84% from-0.78% on Friday. As the opportunity cost of holding interest-free metals falls, lower real yields may play a positive catalytic role in gold prices.

Although recent strong US economic data show that the economic recovery is stronger than expected, the outlook is still overshadowed by the third wave of outbreaks that have hit many other parts of the world. This could lead to weaker overseas demand, delays in economic reopening and supply chain disruptions. In this context, the Fed is likely to continue its loose monetary policy until its long-term inflation and employment targets are met. The Fed's dovish stance is supported by Fed Chairman Jerome Powell and New York Fed Chairman John Williams, both of whom say there is still a long way to go to consider tightening policy.

Looking ahead, the ADP private sector jobs report and the speeches of several Fed officials later will be closely watched by the market. Thursday's Bank of England interest rate decision and Friday's US non-farm payrolls report will also be watched by gold traders for guidance on inflation and the dollar. Higher-than-expected employment could push up yields and the dollar, or put pressure on precious metals prices. If the data are disappointing, the opposite may happen.

During the day, focus on the initial request data, currently expected to be 538000, the previous value of 553000, data or bearish gold, Challenger layoffs data can also be appropriately followed. Learn more from the JRFX economic calendar.

Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.

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