US data showed inflation has reached a multi-decade high and investors are betting on gold and silver as a way to protect themselves against the risk of further increases in the pace of inflation.
In 2021 a large majority of central banks called inflation “transitory”. The situation dramatically changed in the last few months, especially after the beginning of the conflict between Russia and Ukraine. The recent inflation rally pushed the US CPI to 8.5% in March, and the price growth pace reached a historical record in Europe too, at 7.5%.
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One of the main market drivers of this week is expected to be the ECB meeting, in the calendar for tomorrow.
It will be interesting to see if the inflation rally will be enough to force Ms Lagarde to accept some of the requests of the North European hawkish policymakers, who are asking her to bend her dovish stance.
In this scenario, gold and silver are gaining momentum. Indeed, the ETF holding of gold jumped close to an all-time record, but investors are also buying silver.
The precious metal started the week breaking above the key level of $25 per ounce, before continuing its bullish move to jump to $25.6/25.7.
As long as the price remains above $25, the technical scenario continues to be positive, with space for a further price increase. We should note, however, that silver has already gained almost 10% since the beginning of the year.
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He also writes as a technical analyst for the Italian newspaper La Stampa.
Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018.
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