Inflation in the United States, which turned out to be lower than expected, is putting pressure on the U.S. currency. According to economists at ANZ Bank, along with falling real yields, this has helped gold prices to reach the value of $1,800 an ounce again.
According to the bank, a slowdown in inflation led to a sell-off in the U.S. dollar, which in turn has helped gold to strengthen. Meanwhile, falling U.S. real yields from a recent high has allowed to reduce opportunity costs for gold holders. At the same time, one should not expect the Federal Reserve to take a less tough stance in the near future, as the inflation rate is well above the Fed's target of 2%.
Despite the fact that higher prices were driven by demand for gold among speculative investors, it also was noted in the bank that there were no strategic purchases from gold ETFs. The decline in the spot premium in October indicates a weakening of physical demand recently. Nevertheless, central banks continue to officially purchase the yellow metal.