By Barani Krishnan

Investing.com – Unwittingly, the Fed and the ECB made today a day for the gold bulls.

Wednesday’s announcement of stimulus tapers and expected rate hikes by the Federal Reserve sent tumbling on Thursday as investors shed fears of excessive hawkish action by the central bank.

This allowed bullion prices just to touch the $1,800 level. As inflation hedge was refocused on, it enabled them to rise.

The Bank of England surprised the market by raising its interest rate on Thursday, almost two years after it was hit hard by the coronavirus pandemic.

Both the Fed and the BOE warned that inflation unleashed by the pandemic was one they hadn’t expected, with the U.K. bank cautioning that it expected it to be as high as 6% in April – three times above target — while price pressures in the United States stay at four-decade highs.

Another U.S. indicator for inflation was data on new residential construction released on Thursday that showed housing starts up almost 12% in November — the most in eight months — despite record high home prices.

Gold was also helped by investors’ move on Thursday into safe-havens as mega-cap tech stocks on Wall Street’s index took a drubbing.

“The number of short-term risks remain elevated and that could ultimately lead to further inflows to gold now that much of Fed tapering and the (expected) initial rate hikes have been fully priced in,” said Ed Moya, analyst at online trading platform OANDA.

“Risk aversion is hitting the Nasdaq and that has some traders going into cyclicals, while others are buying safe-havens such as gold,” said Moya, noting that gold still faced massive resistance at $1,800 and at its 200-day Simple Moving Average on charts.

U.S. gold futures’ most active contract, , settled Thursday’s trade up $33.70, or 1.9%, at $1,798.20 an ounce on New York‘s Comex. This was the largest percentage gain in a single day for Comex contracts since October 15.

The session peak for February gold was $1,799.95 — the closest it has to come to capturing the $1,800 level since Dec. 1.