Gold is trading near the level of $1800 per ounce. On Monday, prices rose slightly, helped by a decline in US bond yields and fears of an increase in cases of infection. At the same time, investors focused on the meeting of the Federal Open Market Committee this week. Although no actual changes are expected, investors will be looking for clues when the Fed may start to rein in its loose monetary policy. The growth of inflation is already exceeding forecasts and threatens to affect consumer activity. Last month, US consumer prices rose at the fastest pace in three decades. According to a survey conducted by UBS, almost half of professional investors believe that prices will continue to rise in the next twelve months.
Recently, the positive correlation between gold and inflation has weakened. The precious metal retains the attractiveness of a safe haven, and this makes it more in demand in a weak economic situation, when central banks print money to finance asset purchases and with low inflation. These factors prevailed after the global financial crisis of 2008, during the subsequent sovereign debt crisis in the Eurozone and last year, when the pandemic led to the closure of economies. But in the current conditions of rising consumer prices, the link between gold and inflation may well become more obvious. Governments have sent money directly to workers, businesses and health systems. Major infrastructure work has yet to be carried out, so raw material prices and wages are likely to remain at a high level for a long time.
The forecast assumes a strengthening of the Gold price to the levels of 1805, 1810 and 1820 dollars per ounce.