Stagflationary concerns send gold to the key $1800 level

Americans Suddenly Want Smaller Gov -Gallup

Gold last traded at $1,767 an ounce. Silver at $23.26 an ounce.

NEWS SUMMARY: Precious metal prices steadied Monday on a flat dollar. U.S. stocks traded mostly lower amid downbeat economic data as investors awaited fresh earnings reports.

Kitco--"Since the beginning of Q4, the gold price has been biding its time until key inflation reports were issued this week, trading in a tight $30 range no matter what has happened. Each time the bears made a push towards $1750, buyers showed up quickly. And each time the bulls took gold towards resistance at $1780, sellers came in to knock the price back down.

But the gold action beginning this Wednesday was different, as both gold and silver broke higher out of a month-long consolidation surrounding the issuance of the U.S. Consumer Price Inflation (CPI) report an hour before the U.S. stock market opened....

The volatile price action mid-week showed investor demand for bullion overwhelmed the short-term trader selling, which could be the sign of an important shift in the precious metals market. Both gold and silver have developed an inverted head and shoulder pattern on their respective daily charts. This bullish technical pattern could be targeting the descending trend line at the $1840 level in gold.

Meanwhile, worsening supply chain disruptions and a raging energy crisis have joined forces recently to reawaken fears of a stagflationary blow to the global economy. With energy bills skyrocketing, companies are seeing profit margins get squeezed and passing those costs down to consumers, at a time when supply bottlenecks are already restraining growth as central banks are moving towards higher rates....

In its World Economic Outlook, the IMF said its 2021 global growth forecast is now at 5.9% from the previous July estimate of 6%.

For now, however, inflation risks are 'skewed to the upside,' while growth risks are 'tilted to the downside,' the report pointed out. 'Inflation risks are skewed to the upside and could materialize if pandemic-induced supply-demand mismatches continue longer than expected.'

The IMF is warning the Federal Reserve to prepare to tighten its policy. These statements by the IMF echo what took place in the 1970's, which describes an environment of higher inflation and lower growth, known as stagflation when gold thrives."