Posted 18th May 2022

Gold Finds Support Above $1,800 Despite UK Inflation Hitting 40-Year High

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Inflation is yet again the major talking point on Wednesday after the UK’s latest figures showed that annual inflation is at its highest level since 1982.

However, despite inflation now standing at 9% in the UK, as the figure was in line with expectations, the market reaction has been muted so far with gold trading little changed at around $1,815 an ounce.

This level represents a small improvement from the start of the week with the price managing to bounceback above the key level of $1,800 an ounce after slumping to levels last seen in early February. 

Live Gold Price – $/oz

Yet as long as inflation remains a primary concern for the major economies, gold is likely to find it difficult to make significant gains with the spectre of rising interest rates severely denting the metal’s appeal. 

While inflation in the US is running a little less hot than in the UK, it is still a major source of worry with Federal Reserve Chair Jerome Powell stating yesterday that the bank will use all of its tools to bring inflation significantly lower and reinstating the likelihood of 50 basis point rate increases in both June and July. 

The fact that gold did recover back above $1,800 shows there is still support for the asset but investors hoping for a price above $1,850 may have to wait some time yet.

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