Posted 13th June 2022

Inflation Concerns Dominate Markets as Gold Continues to Trade in Recent Range

gold bullion stack bars

A new week starts but it’s a familiar headline dominating proceedings with equities falling on concerns about the impact that inflation is having on economic growth prospects with both the Federal Reserve and Bank of England set to announce further interest rate increases this week.

Gold has found itself pulled by two contrasting factors with an increased appeal for safe-haven assets offset by the prospect of a series of rate hikes by central banks across the world. As a result, the initial gain that saw gold touch $1,870 an ounce was quickly reversed with the precious metal having found its natural range for the time being between $1,840-$1,860 an ounce. 

Live Gold Price – $/oz

On Wednesday the Fed is set to raise its benchmark rate by 50 basis points for a second consecutive month while on Thursday the Bank of England is expected to nudge its rate up to 1.25%. While these rates still remain low historically, after such a sustained period of low-interest rates, the reaction on markets has shown how used everyone had become to being able to borrow ultra-cheaply.

Gold had initially suffered in this switch to hawkish policies but with this week’s interest rate moves priced in, it would take a surprise move to materially move the price of gold from its current range.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.