By Barani Krishnan

Investing.com: Gold is now back at the psychological bullish mark just a month after it lost its $1,800 status, strengthening its position as an inflation hedge.

U.S. gold futures’ most active contract, , settled Thursday’s trade up $6.70, or 0.4%, at $1,804.90 an ounce on New York‘s Comex. On Nov. 22, it was at $1,800.

The week ended with February gold rising 1.1%. This is the highest weekly gain since November early.

Gold’s ascension came as the Federal Reserve announced its heightened concerns about inflation in the United States on a week that the central bank laid out an expedited pathway to ending its pandemic-era stimulus and raising interest rates for the first time since the Covid-19 outbreak of March 2020.

“Gold is taking the news that central banks are tightening monetary policy and tackling inflation head-on very well,” said Craig Erlam, analyst at online trading platform OANDA.

“You would be forgiven for thinking this would be a negative development for the yellow metal and, in the longer term, I expect it will be. But it’s also a development that was almost entirely expected and priced in.”

News about rate rises almost always have a negative impact on gold. Bullion traders seem to have their eyes on U.S. inflation, so gold can continue to serve its original role of being a hedge. But, strong Fed action could be a negative for yellow metal.

CPI (the U.S.) rose 6.8% from the previous year, as reported by the Labor Department last week. This was the highest rate of growth since 1982. The Labor Department also reported that the U.S. producer price index jumped 9.6% in November, a new record.