The gold price edged higher today as inflation fears continue to shake U.S. investors.
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The Gold Spot US Dollar was up 0.1% in mid trading today, boosted by data from The U.S. Bureau of Economic Analysis. It showed that the Personal Consumption Expenditures (PCE) Index, the Federal Reserve’s preferred inflation measure, rose 0.3% in June from May, up from a 0.2% monthly rise a month earlier.
Gold Links
Demand for gold tends to remain high during times of higher inflation as it is seen as one of the key hedges against rising prices.
The move higher also comes only 24 hours after Federal Reserve chair Jerome Powell signaled the central bank will hold off on interest-rate cuts as it assesses the impact of U.S. tariffs on inflation.
The new inflation data is likely to firm the Fed’s determination to hold off any rate cuts. That’s despite President Donald Trump in Grumpy Trumpy form today lambasting “too late” Powell as a “total loser.”
Gold’s relationship with interest rates is also stellar, tending to increase in demand as rates fall.
“The Fed did not fulfill some of the market’s expectations that it would signal imminent interest rate cuts. Powell stated that no decisions had been made about easing in September, that the labor market was solid, and inflation was above target,” Christopher Louney, a commodities strategist at RBC Capital Markets, said.
Shiny Predictions
The gold price may also have been buoyed by predictions from investment firm Fidelity earlier this week which believes bullion could climb as high as $4,000 an ounce by year-end, buoyed by a weakening US dollar and a pivot by the Fed towards rate cuts.
Another driver for gold, despite a raft of recent trade deals, is the persistent threat of U.S. tariffs on countries such as India and China. The prospect of tougher sanctions on Russia as well as continued conflict in the Middle East and Ukraine also keep geopolitical nerves frayed.
This uncertainty, as seen below, has largely led to a huge spike in demand for gold and the gold price over recent months.
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