• The soaring inflation in US and Germany favors the yellow metal.
• US president Biden’s speech supporting the Fed Powell’s helped the Yields to surge.
• Russia-Ukraine situation also underpins the bullish rally of the Yellow metal.

Gold price has edged high and reached the 2 month high of $1844 during Thursday Asian session. The yellow metal holds the uptrend despite the persistent strength seen around the US Treasury yields.

The soaring inflation in the UK and Germany would be favorable for the yellow metal because investors boosted its demand as an inflation hedge. Meanwhile, the recent speech from US President Joe Biden who renewed hopes of faster monetary policy normalization by the Federal Reserve (Fed), also helped the gold prices to soar.

U.S. President Joe Biden on Wednesday said it was appropriate for the Federal Reserve to recalibrate the support it provides to the U.S. economy, in light of fast-rising prices and the strength of recovery.  Biden told a news conference “Given the strength of our economy and recent price increases, it’s appropriate, as … Fed Chairman (Jerome) Powell has indicated, to recalibrate the support that is now necessary.”

“The critical job of making sure that the elevated prices don’t become entrenched rests with the Federal Reserve, which has a dual mandate: full employment and stable prices,” the president said.

Additionally, US President Biden directly warned Russia not to invade Ukraine and if they do they’ll lose access to the US dollar.

Elsewhere, Inflation in Britain had rose faster than expected to its highest in nearly 30 years in December, which has hard impact on living standards and putting pressure on the Bank of England to raise interest rates again.

Russia-Ukraine situation also favors the gold rally as investors look for safe-haven assets to hedge against geopolitical tensions.

Tensions simmer between the West and Russia, with U.S. President Joe Biden predicting Moscow would make a move into neighbouring Ukraine, while Russian officials have denied this. But the Kremlin has massed some 100,000 troops near Ukraine’s borders.

Further, US President Biden had signaled that the talks on the Build Back Better (BBB) stimulus is still on However US Senator Joe Manchin rejects the comments. This US stimulus might weigh on the gold prices.

XAU/USD 4 Hour Chart:

Support: 1819.1 (S1), 1798.1 (S2), 1786.1 (S3).

Resistance: 1852.2 (R1), 1864.3 (R2), 1885.3 (R3).

The inflation figures of UK and Germany, Geopolitical tensions, US Biden’s support for Fed Powell woks as the major catalysts underpinning the uptrend for Gold. We expect a bullish trend for XAU/USD.