(Bloomberg). — The price of gold was stable as traders analyzed comments by the Federal Reserve regarding its monetary policy tightening trajectory in advance of Tuesday’s release of U.S. Inflation data. 

Bullion is being buoyed by demand for inflation hedges and haven assets amid Russia’s war in Ukraine, but the prospects of higher interest rates are capping gains on the non-interest bearing metal. The stronger dollar and rising bond yields are both factors that weigh on gold. These trends reflect Fed policy tightening expectations. 

Charles Evans, the Fed Bank of Chicago president who has long been one of the U.S. central bank’s more dovish policy makers, said an accelerated pace of interest-rate increases to combat inflation is worth debating. Meanwhile, Fed Governor Christopher Waller said it’s doing all it can to avoid “collateral damage” from raising interest rates, a “brute-force tool” that can act as a “hammer” on the economy. 

According to an economist survey by Bloomberg, consumer prices rose 8.4% in the last month compared with a year earlier. Although that may be the peak of inflation, it is still possible that there will be persistent and elevated levels. According to Bloomberg initial data, investors still seek a place of refuge with bullion-backed exchange traded funds. These are near the highest levels in over a year.

“Gold should continue to see strong inflows as uncertainty over inflation and growth will remain elevated over the coming months due to geopolitics and differing views on how aggressive the Fed will need to be with tightening of monetary policy during the summer months,” said Edward Moya, a senior market analyst at Oanda Corp.

The price per ounce stood at $1952.93 in Singapore at 09:10 AM. It had risen 0.3% Monday. Bloomberg Dollar Spot Index gained 0.1%, and now is at its ninth straight day of growth. Its longest stretch of gains since 2020. Silver fell while palladium and platinum rose.

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